Coinbase (COIN) shares rose 2.5% in pre-market trading on Friday after Wall Street giant Bank of America (BAC) upgraded the shares to neutral from underperform.
The investment bank raised its Coinbase price target to $217 from $110. The stock was trading around $204 at publication time.
Bank of America said it was upgrading the stock for a number of reasons, including the positive macro backdrop that has helped the cryptocurrency markets and trading volumes, analysts led by Mark McLaughlin wrote. The note also said the exchange’s expense discipline and increased diversification should also help its earnings.
However, the analysts noted that there are potential risks that could limit the the stock’s upside, including the exchange’s continued dependence on transaction revenue for profitability and the regulatory overhang linked to the ongoing lawsuit with the U.S. Securities and Exchange Commission (SEC).
The shares fell over 9% yesterday following a report that the Chicago Mercantile Exchange (CME) might soon offer spot bitcoin trading, which could become a potential competitor to exchanges such as Coinbase.
Read more: Coinbase Shares Sink 9% on Report CME to Consider Listing Spot Bitcoin
Edited by Kevin Reynolds.
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Will Canny is CoinDesk’s finance reporter.
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