The stock of Coinbase Global (COIN) has been downgraded ahead of its upcoming first-quarter financial results scheduled for May 8.
The largest U.S. cryptocurrency exchange was downgraded by equity research firm Monness, Crespi, Hardt & Co. analyst Gus Galá over concerns that Coinbase might issue disappointing first-quarter results. Consequently, Galá cut his rating on COIN stock to neutral from Buy previously, and removed his $275 price target on the shares.
In a research note to clients, the analyst called his downgrade a “tactical move” ahead of earnings. Galá wrote that he expects an earnings miss or downwardly revised guidance from Coinbase, which could sink the share price and offer a better buying opportunity. While down 21% on the year, COIN stock has risen 25% in the past month after hitting a 52-week low in early April.
Volatility Persists
As a leading crypto exchange, Coinbase makes money primarily through transaction fees, and many investors have moved to the sidelines and are sitting in cash as market volatility persists, notes Monness, Crespi, Hardt & Co. As such, there is a chance that Coinbase’s Q1 print will disappoint Wall Street analysts and Main Street investors.
It also remains to be seen if U.S. President Donald Trump will usher in an era of crypto-friendly policies and favorable regulation, which he promised on the campaign trail last year. Efforts to shape the U.S. into the “crypto capital of the planet” are getting bogged down with legislation in Congress, says Galá.
Is COIN Stock a Buy?
The stock of Coinbase Global has a consensus Moderate Buy rating among 22 Wall Street analysts. That rating is based on 12 Buy, nine Hold , and one Sell recommendations assigned in the last three months. The average COIN price target of $271.05 implies 37.59% upside from current levels.
