Crypto exchange Coinbase (COIN) has a major edge over other platforms, according to MoffettNathanson Senior Analyst Lisa Ellis.
“Coinbase is a very unique one-of-a-kind asset providing the infrastructure layer for the crypto economy,” Ellis said on Yahoo Finance Live (video above). “So, you don’t have to believe in any particular application of crypto. It can be trading and investing. It can be payments, it can be [non-fungible tokens] NFTs. It can be cross-border transactions.”
MoffettNathanson has a ‘Buy’ rating for the stock and a price target of $600 per share — the highest price target for Coinbase on Wall Street.
In Ellis’s opinion, Coinbase is the “leading Western regulated on-ramp and off-ramp into the crypto economy” with more than 160 digital coins on the platform.
“It provides that critical process of helping consumers and businesses migrate between the traditional world, our real world, and the crypto world,” Ellis added. “And as in a stock, it’s a very unique, one-of-a-kind asset, getting in on the ground floor of one of the most transformational technologies over the next decade.”
‘An extraordinarily attractive entry point’
Part of the attraction of Coinbase stock right now is its valuation, according to Ellis.
“It’s trading right now at literally only less than five times forward revenues, which to put that in perspective: That’s about half the valuation of a stock like Shopify, for example, another very popular growth stock,” Ellis said. “It’s an extraordinarily attractive entry point into this name.”
Meanwhile, the underlying cryptocurrencies traded on Coinbase have been in the headlines since Russia invaded Ukraine, with the ever-volatile bitcoin (BTC-USD) in demand in Russia and beyond.
The debate continues on whether bitcoin is a “safe haven” or a risky investment. Some crypto aficionados see bitcoin as “digital gold,” a handy place to store cash during times of uncertainty, while others note that the digital currency has been behaving more like risk-on assets amid the current Federal Reserve rate hike cycle.
The 90-day correlation between bitcoin and the S&P 500 (^GSPC) reached a new 17-month high on Friday, surpassing the February 22nd high, according to data from Arcane Research.
However, according to Arcane’s weekly newsletter, “bitcoin’s correlation to the S&P 500 has only been higher for five days in BTC’s history, showing that the current correlation regime is unprecedented in BTC’s history.”
In either case, the growing interest in digital assets has led to a wide range of platforms offering investors the ability to buy, sell, and store cryptocurrencies.
“The visible plethora of cryptocurrency exchanges stirs up competitive questions: who are all these different cryptocurrency exchanges, and how is Coinbase differentiated?” Ellis wrote in a note to her clients last month.
“We continue to believe that Coinbase occupies a unique, strong competitive position among a wide range of crypto-native competitors due to its differentiated consumer brand, regulatory sophistication, and global scale,” she continued. “We believe these factors should enable Coinbase to maintain market share and expand into new businesses.”
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv
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