Cryptocurrency exchange Coinbase (COIN) rose on Tuesday as a Needham analyst kicked off coverage of the stock with a buy rating based on opportunities beyond exchange services.
Shares of the Wilmington, Del., company at last check rose 1.4% to $259.55.
Needham analyst John Todaro set a $420 price target on the stock, indicating 64% potential upside from current prices.
Tadaro said Coinbase is a “market-leading cryptoasset exchange with significant future opportunities beyond exchange services,” including staking, custody and yield-bearing products.
He expects the company’s exchange business to “grow rapidly and sustainably” as new investors adopt its crypto assets and services.
Coinbase provides financial services, infrastructure, technology, and custodial services for what Todaro called the high-growth cryptoasset universe.
Coinbase Global Chief Executive Bruce Armstrong recently said the country’s largest cryptoassets exchange was putting its own money into cryptocurrency.
“We recently received board approval to purchase over $500 million of crypto on our balance sheet to add to our existing holdings,” Armstrong tweeted last week.
“And we’ll be investing 10% of all profit going forward in crypto. I expect this percentage to keep growing over time as the cryptoeconomy matures.”
Further, “Hopefully over time we can operate more of our business in crypto,” he said. “Today it is still a mix.”
In its first earnings report as a public company, Coinbase blew away second-quarter estimates.
The cryptocurrency exchange reported adjusted earnings per share of $6.42 on revenue of $2.22 billion.
Coinbase saw monthly transacting users jump to 8.8 million, up 44% from the first quarter. Trading volume increased to $462 billion from $335 billion.
While the company didn’t provide guidance, it did project lower monthly transacting users and lower trading volumes during the third quarter.