Coinbase seen benefiting from credibility issues and Shanghai fork - JPMorgan raises target

© Reuters

By Vlad Schepkov

JPMorgan maintained a 'Neutral' rating on Coinbase (NASDAQ:COIN) but raised its price target to $60 from $53, noting that the company is "a beneficiary of the challenges that have faced other brokers/exchanges in the aftermath of the collapse and bankruptcy of FTX."

In its latest note, JPMorgan analysts highlight the company's strong reputational standing in the industry, noting that while "the crypto-ecosystem has suffered further meaningful credibility issues, Coinbase has emerged with its credibility and brand strengthened — at least relatively."

They also point out that the credibility factor is already having a meaningful positive impact on the business as Coinbase's "market share has increased as its trading volume has surged more than peers so far in January." Adding to their point on trading volumes, the analysts further note the generally improving crypto environment due to recent price surges of main coins: "For a broker/exchange like Coinbase, higher volumes and prices help."

Lastly, the analysts speculate the upcoming 'Shanghai Fork' may be an additional positive for COIN, as they see "Beacon Chain withdrawals allowing Coinbase to auto-enroll retail Ethereum owners into its staking program, as was done with the launches of Cardano staking in 1Q22 and Solana staking in 2Q22."

Overall, JPMorgan sees "staking revenue from the Shanghai Fork and revenue from higher interest rates represent higher quality earnings upside", as it maintains a 'Neutral' rating, but raises the price target to $60.

COIN closed at $49.42 yesterday, and the stock is up over 47% YTD.