Jefferies Launches Crypto Exchange Coinbase Coverage With Holding Note On Short-Term Concerns

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Premium branding Coinbases (COIN) as an onshore, regulated entity with a healthy balance sheet should help the crypto exchange weather the fallout from the collapse of rival FTX, Jefferies said in a research report on Monday.

The broker initiated coverage of the stock with a holding quote and a price target of $35. The rating comes after rival broker Cowen downgraded the shares, which fell 86% last year, to push the market’s performance to outperform on Thursday, citing a lack of clarity over a possible recovery in trading volumes. after the collapse of FTX. Coinbase shares rose 14% in early trading to $37.94.

The fallout from FTX has challenged the safety, security and legitimacy of the broader crypto ecosystem, according to the report, compounding an already challenging operating environment as retail trading volumes plummeted along with crypto prices. crypto.

Coinbase will come under severe pressure in the near term as its retail customer base trades less frequently in the bear market, but the company has resilience due to its healthy balance sheet with over $5 billion in cash, its proactive approach to regulatory compliance, prudent risk management and its legitimacy as a publicly traded and audited company, the note said.

The competitive landscape will be less crowded for Coinbase after FTX, but Jefferies still expects a Q4 shortfall due to lower retail transaction volumes. The company is expected to report fourth quarter results around the end of February, based on previous models.

Read more: Cowen downgrades Coinbase stock, citing declining trading volume

UPDATE (Jan 9, 15:47 UTC): Adds concerns to title, Coinbase stock performance last year in second paragraph.

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