Barclays (BCS) is lowering its Coinbase (COIN) projections ahead of earnings and reducing the company to underweight from equal weight, according to a recent research note.
Nonetheless, the bank increased its price estimate for the crypto exchange’s stock to $70 from $61. Coinbase shares were trading 1.4% down at $84.79 in premarket trading at the time of writing.
Coinbase, which reports second-quarter earnings after the close on Aug. 8, has surprised to the upside on revenue and costs in recent quarters, but with volumes and USD Coin (USDC) market cap depressed, a regulatory crackdown, and a powerful recent run-up in the share price, the bank sees few positive near-term drivers.
“While we continue to believe Coinbase is a likely long-term winner in the broader crypto ecosystem, fundamentals remain challenged, and recent relief from price actions, increasing rates, and cost rationalization likely have little further to run,” analysts led by Benjamin Budish wrote
While Coinbase shares have risen significantly in response to news of a BlackRock-sponsored spot bitcoin (BTC) exchange-traded-fund (ETF) application, for which Coinbase is expected to be custodian and prime broker, Barclays believes this “does not accurately reflect the potential eventual P&L impact that could accrue to Coinbase.”