Wall Street megabank Goldman Sachs has initiated coverage of United States cryptocurrency exchange Coinbase with a buy rating following a major crash on crypto markets.
In a note to clients on Monday, Goldman Sachs analyst Will Nance stated that Coinbase stock is the best way for investors to gain exposure to the crypto industry, CNBC reported. According to the report, shares of crypto companies like Coinbase should be regarded as a hedge against the parabolic volatility of cryptocurrencies like Bitcoin (BTC).
“While we believe the core business today offers an attractive growth profile with the potential to drive new high levels of profitability, we see significant white space for new initiatives to drive more stable and recurring revenue streams to complement the core trading business over the longer term,” the analysts reportedly wrote.
In the buy rating for Coinbase shares, Goldman Sachs analysts set a 12-month price target of $306, implying a share price increase of 36%. However, Coinbase’s longer-term fate will depend on the continued success or failure of cryptocurrencies as an asset class, the client note reportedly reads.
Following the newly initiated buy rating, shares of COIN rose nearly 3.5% to over $235 in premarket trading. The stock debuted on Nasdaq on April 14 at a price of $381. The price rebound comes in line with a notable uptick on crypto markets, with Bitcoin surging more than 4% over the past 24 hours to trade above $37,400.
The latest buy rating is not the first time that Goldman Sachs mentioned Coinbase as a successful stock. In late April, Goldman Sachs mentioned Coinbase as one of 19 U.S. stocks performing significantly better than the S&P 500.
Previous reports in December 2020 suggested that Coinbase was looking to Goldman Sachs to handle its public filing.
The latest news comes shortly after Goldman Sachs reportedly launched Bitcoin derivatives trading to Wall Street executives in early May.
