Needham: Street Forecasts on Coinbase Stock Are ‘Too Bullish’

Analysts at Needham & Company have voiced concerns regarding the overly optimistic projections for Coinbase, indicating that recent street predictions for the company are “too bullish.”

While Coinbase had a robust performance in the first quarter, Needham anticipates a tough environment for the remainder of the year, prompting them to revise their forecasts.

The firm noted that street forecasts became overly optimistic following a strong first quarter, failing to account for the declining performance of many crypto assets since their peak earlier this year. They pointed out a reduction in retail engagement, as many newcomers to the crypto market have experienced losses, making them reluctant to invest further in the near term.

As a result of these observations, Needham is lowering its forecast for the third quarter and expects adjustments to the consensus revenue and earnings-per-share estimates for the second quarter of 2024.

Despite these short-term difficulties, Needham maintains a positive outlook for Coinbase’s long-term potential. The analysts uphold a Buy rating with a price target of $260, highlighting several favorable factors expected to benefit the company in the latter half of 2024 and early 2025. Notably, they cite the increased likelihood of a Trump victory, which could be advantageous for the crypto market from both regulatory and volume perspectives, along with anticipated Ethereum ETFs and an optimistic projection for bitcoin following its upcoming halving event.

In light of the challenges, Needham considers Coinbase a strong investment opportunity in the expanding crypto landscape. They underscore the company’s position as a leading fiat-to-crypto on-ramp and its growing institutional business.

The analysts anticipate that Coinbase will continue to expand its trading revenue as a premier fiat-crypto on-ramp within the rapidly evolving crypto ecosystem. They also note the ease of use of Coinbase’s retail application and rising traction among institutional clients as positive indicators for future growth.

In conclusion, while recognizing the short-term obstacles, Needham identifies considerable potential for Coinbase amid the changing dynamics of the crypto market.