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Sunday, October 1, 2023

Coinbase: Further Crypto Integration Is the Real Game Changer, Says Oppenheimer

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The crypto train has left the station once again, indicating the recent drop is a mere bull market blip. The prospective bear market appears further away than initially thought and there have been several confidence boosting events recently for bitcoin and its fellow digital currency brethren.

For one, last week, UWM Holdings, the U.S.’ second-largest mortgage lender announced it would soon begin accepting bitcoin payments, marking another step toward mainstream adoption.

Closer to bitcoin’s natural environs, also last week, Coinbase (COIN) announced the board had approved the purchase of $500 million in cryptocurrencies to be added to the balance sheet. Bitcoin will take its place among other crypto investments such as Ethereum, Proof of Stake assets, DeFi tokens and other cryptocurrencies. That’s not where it ends, though. The company also said it intends to build a crypto assets portfolio, allocating 10% of its quarterly profits to the endeavor.  

Moreover, over the long-term, Coinbase expects to further integrate crypto into its day-to-day activities. Oppenheimer’s Owen Lau notes this could eventually mean paying its vendors and employees in digital assets, among other “financial transactions.” It is this aspect which Lau thinks investors should really take note of.

“Buying crypto on the balance sheet is definitely a testament, but further integration of digital assets into COIN’s corporate practice has a deeper influence not just on COIN but on the whole cryptoeconomy,” the 5-star analyst said. “COIN is in a good position to introduce new products (e.g., credit/debit cards) to support retail transactions in crypto and to influence crypto adoption in institutional transactions.”

Since Coinbase went public in April, its share price movements have closely followed that of bitcoin, and following the news, Lau does not expect the “correlation to come down materially in the near future.”

However, over time, the correlation should decline as the reliance on BTC drops and the company “diversifies away” from trading revenue.

Overall, Lau reiterated an Outperform (i.e. Buy) rating on COIN shares, whilst sticking with a $444 price target. The implication for investors? Upside of ~73%. (To watch Lau’s track record, click here)

Most of Lau’s colleagues agree. The stock’s Moderate Buy consensus rating is based on 10 Buys vs. 3 Holds and 1 Sell. The projection is for 12-month gains of ~36%, considering the average price target clocks in at $350.17. (See COIN stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post Coinbase: Further Crypto Integration Is the Real Game Changer, Says Oppenheimer appeared first on TipRanks Financial Blog.

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