Shannon Stapleton/Reuters
- Wedbush tagged Coinbase with an "outperform" rating and $275 price target on Wednesday, which would be a 22% increase from Wednesday's close.
- Analysts led by Moshe Katri said the company is a "one-stop shop" crypto ecosystem.
- Katri laid out four reasons why he believes Coinbase stock is set to outperform.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
Coinbase stock could climb 22% from current levels because the company is a "one-stop shop" crypto ecosystem, according to Wedbush analysts.
In a note to clients on Wednesday, analysts led by Moshe Katri initiated coverage on Coinbase Global with an "outperform" rating and a $275 price target.
The price target represents a potential 22% increase from Wednesday's closing price of $224.80.
"We view COIN as a "one-stop shop" platform, enabling roughly 56MM retail users, 8,000 institutions, and 134,000 ecosystem partners in over 100 countries to participate in the crypto economy," Katri wrote.
Katri and a team of Wedbush analysts went on to describe four factors that give them confidence in Coinbase stock moving forward.
First, they detailed Coinbase's "first-mover" advantage. The analysts said that Coinbase is the "default starting place for new user journeys into the crypto economy" and noted that over 90% of retail users enter the platform organically or through word-of-mouth.
The second factor that the Wedbush analyst said gives them confidence in Coinbase is the company's dominant and growing share of crypto assets.
According to Coinbase's SEC filings, the company holds 11.3% of the entire crypto market capitalization.
The third factor that Wedbush's Katri highlighted in his note to clients was the integration of blockchain technology and traditional finance on Coinbase that enables cryptocurrencies to become part of the payments eco-system.
According to Wedbush, COIN "creates trusted and easy-to-use products, crypto assets that can be dynamically transmitted, stored, and programmed to serve the needs of an increasingly digital and globally interconnected economy."
Finally, Wedbush analysts highlighted the growing diversification of revenue streams at Coinbase as a bullish factor for the stock.
Coinbase has moved to create an entire web of ancillary services tied to the crypto market. For example, customers can now borrow cash using bitcoin as collateral on the platform.
Wedbush's analysts also noted that in the first quarter, on average, 25% of retail users who invested in cryptocurrencies on Coinbase also engaged with at least one non-investing product.
The Wedbush team arrived at its $275 price target for Coinbase by using a 22.7x multiple on 2022's earnings, assuming a 20% growth rate for revenue and EPS.