Stock analyst Mike Colonis of HC Wainwright doubled his price target Coinbase (currency -6.28%) Early Tuesday morning. Colonis reiterated a “buy” rating on the cryptocurrency trading veteran, raising his price target from $115 to $250 per share.
Wainwright now has the highest price target among the 22 companies covering the stock tracked by MarketBeat, suggesting a price upside of 44%.
Wainwright's predictions
Estimates are based on Coinbase's Q4 report released on February 15. The company generated a modest net profit while the average analyst expected a small loss, and revenue came in 16% above the consensus estimate.
Colonnese was also impressed by Coinbase's strong guidance next quarter and a long string of positive earnings before interest, taxes, depreciation, and amortization (EBITDA) during a difficult economy with declining cryptocurrency prices. We expect a strong boost for the cryptocurrency market from the next halving Bitcoin Mining Rewards The company sees Coinbase expanding its dominant market share in US cryptocurrency trading services throughout the upcoming bull run.
Is this analysis logical?
Coinbase shares trade at 13 times sales and 68 times free cash flow. On the other hand, the Bitcoin halving should set the cryptocurrency market on fire, inspiring speculation and long-term investments by the truckload. Coinbase charges aggressive trading fees all the way, so the potential boom should do wonders for the company's financials.
Considering that Coinbase entered the public stock market several months after the cryptocurrency's last halving, there is no useful history of previous reactions to these game-changing events. Coinbase is charting a path through uncharted waters, at least from an investor's perspective.
However, Colonnese's analysis seems directionally correct, and I expect Coinbase stock to rise over the next two years. All the way to $250? Perhaps, but a more modest increase would still be good news.
Anders Bylund has positions in Bitcoin and Coinbase Global. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
