Coinbase Upgraded to Neutral From Underperform at Bank of America on Positive Crypto Market Dynamics

Bank of America upgraded Coinbase to neutral from underperform and raised its price target to $217 from $110.

The report stated that the current macro backdrop is positive for the growth of the crypto market and transaction volumes.

Risks include the exchange’s continued dependence on transaction revenue and the company’s ongoing litigation with the SEC, the bank said.

Coinbase (COIN) shares rose 2.5% in premarket trading Friday after Wall Street giant Bank of America (BAC) upgraded shares to neutral from underperform.

Investment bank Coinbase raised its price target to $217 from $110. The stock was trading around $204 at the time of publication.

Analysts led by Mark McLaughlin said Bank of America is bullish on its stock for several reasons, including the positive macro environment that is helping cryptocurrency markets and trading volumes. The note also said the stock market’s expense discipline and increased diversification should also help its earnings.

But analysts noted there were potential risks that could limit the stock’s rise, including the exchange’s continued reliance on transaction revenue for profitability and regulatory setbacks linked to ongoing litigation with the U.S. Securities and Exchange Commission (SEC).

Shares fell over 9% yesterday following a report that the Chicago Mercantile Exchange (CME) may soon offer spot bitcoin trading, making it a potential rival to exchanges like Coinbase.

Read more: Coinbase Shares Drop 9% on Report that CME Will Consider Listing Spot Bitcoin