Bank of America upgraded Coinbase shares to buy from neutral, leaving the price target unchanged at $340.
The upgrade was due to increasing signs of revenue diversification beyond just retail crypto trading, a trend which it thinks will accelerate further this year, the bank said in a note on Thursday.The bank forecasts subscription and services revenue to increase to 16% of the company’s total revenue in 2023, from 12% in the third quarter of 2021.This trend will be driven by a combination of offerings such as staking, earn campaign, Coinbase’s non-fungible token platform and decentralized finance products such as DeFi yield, the report said.Scaling of these non-trading revenue streams could also lead to increased interest in the stock from institutional investors, Bank of America noted.Uncertainty around regulation remains a potential risk, but Coinbase’s “technology/innovation and brand are positive differentiators,” the report added. The bank also sees potential upside to the company’s fourth quarter guidance.Coinbase shares rose 1.05% in pre-market trading on Thursday.
Read more: Coinbase Offers Access to DeFi Yields With DAI and Compound
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