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Tuesday - Cantor Fitzgerald has initiated coverage on Coinbase Global Inc. (NASDAQ:COIN) with an Overweight rating and a price target set at $245. The research firm's analyst, Brett Knoblauch, highlighted the potential of the cryptocurrency exchange beyond its primary trading operations, focusing on its Layer 2 solution, Base, and its partnership with Circle, a private company involved in stablecoins. According to InvestingPro data, Coinbase maintains a strong financial position with a current ratio of 2.28, indicating robust liquidity to support its strategic initiatives.
Knoblauch's analysis suggests that these segments could pivot the narrative for Coinbase from a cyclical trading platform to an essential infrastructure component of the crypto economy. The analyst believes that as the market gains more insight into the scale and profitability of Base and stablecoins, the valuation of Coinbase shares will increase. This transformation is already reflected in the company's impressive revenue growth of 115% over the last twelve months, with a healthy gross profit margin of 86%.
Coinbase's current share price, trading approximately 32% below its historical average valuation multiples based on enterprise value to sales, is seen as an attractive entry point. Cantor Fitzgerald's stance is based on the premise that the market has not fully appreciated Coinbase's non-trading revenue streams, which are expected to support earnings despite concerns about trading volumes. InvestingPro analysis suggests the stock is currently undervalued, with six analysts recently revising their earnings estimates upward for the upcoming period. For deeper insights into Coinbase's valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
For the first quarter of 2025, Cantor Fitzgerald estimates Coinbase's trading volume to be $385 billion, which is below the consensus of $416 billion. Looking further ahead, the firm's projections for 2025 and 2026 anticipate a 5.7% and 20.3% lower trading volume than the market consensus. However, the impact on earnings per share (EPS) is minimal, with Cantor Fitzgerald's EPS estimate for 2026 only 1% below consensus. The company's current P/E ratio of 15.12 and strong EPS of $9.48 suggest solid fundamentals despite market volatility.
The analyst suggests that the market has assigned a lower multiple to Coinbase due to perceived earnings volatility. However, Cantor Fitzgerald argues that this volatility is decreasing, which should justify a higher multiple for the company's shares. The research firm's position indicates a bullish outlook on Coinbase's ability to diversify its revenue and reduce dependency on the cyclicality of cryptocurrency trading volumes. With a market capitalization of $39.93 billion and a strong Piotroski score of 8, InvestingPro data reveals additional bullish signals that could support this positive outlook.
In other recent news, Coinbase Global Inc. is drawing attention with several key developments. Piper Sandler has adjusted its price target for Coinbase to $180, down from $310, while maintaining a Neutral rating. The firm forecasts a 25% year-over-year increase in total revenues for the first quarter of 2025, reaching approximately $2.05 billion, despite a decline in adjusted EBITDA from the previous quarter. Concurrently, Goldman Sachs has set a price target of $195 for Coinbase, also with a Neutral rating, reflecting cautious optimism about the company's growth potential amid fluctuating cryptocurrency prices.
Moreover, Coinbase is reportedly in advanced discussions to acquire Deribit, a leading platform for Bitcoin and Ether options trading. This potential acquisition could enhance Coinbase's market position, although a final agreement has not yet been confirmed. Raymond (NSE:RYMD) James has reiterated a Market Perform rating on Coinbase, citing the volatile nature of the cryptocurrency market and potential increased competition as factors for caution. The firm expressed concerns about the sustainability of Coinbase's revenue and EBITDA momentum in light of these market dynamics.
These developments come as Coinbase prepares to report its first-quarter earnings for 2025, with investors closely monitoring the company's performance. The ongoing changes in the cryptocurrency landscape, including regulatory shifts and market volatility, continue to play a significant role in shaping Coinbase's outlook.
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