Why This Stock Is An Attractive Way To Play The Growing Crypto Asset Universe

Given Coinbase Global, Inc.'s COIN diverse offerings, an analyst at Needham sees strong upside potential for the shares.

The Coinbase Analyst: John Todaro initiated coverage of Coinbase with a Buy rating and $420 price target, up about 64% from current levels.

The Coinbase Thesis: Coinbase is a leading, fiat-crypto on-ramp, and its exchange business is likely to grow rapidly and sustainably as new investors adopt its crypto assets and services, Todaro said in a note.

Coinbase, which is the largest crypto exchange by trading volume, offers USD fiat pairs, maintains deep institutional grade liquidity, and has become quicker at listing new assets.

The exchange is growing its market share and establishing itself as a "go-to crypto exchange" for retail and institutional users, he added.

Needham expects a 467% increase in revenue in 2021 and a 9% increase in 2022 on a high comp prior year.

Related Link: Coinbase Analyst: Crypto Exchange Is 'One-Stop Shop' With Underappreciated Monetization Potential

"COIN's opportunities in staking, custody, and interest bearing accounts will accelerate its positioning as a one-stop shop for crypto financial services, we believe," Todaro said.

Additionally, Coinbase is in the process of launching other yield-bearing products, including a USDC yield account.

Coinbase, the analyst said, is an attractive way to play the growing crypto asset universe, which includes overlap in the high growth areas of stablecoins, decentralized finance, non-fungible tokens, borrow/lend applications, and "yield farming."

Investor concerns regarding fees are misplaced, as the non-commoditized nature of crypto exchanges differentiates them from traditional brokerage firms, where fee compression has occurred in recent years, the analyst said.

COIN Price Action: Coinbase shares were up 1.5% at $259.70 at time of publication.