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MoffettNathanson told investors in a note Monday that they assume the crypto winter will end in late 2023 and Coinbase (NASDAQ:COIN) revenues and trading volumes will begin to surge in 2024.
As a result, the firm described Coinbase’s stock as “highly attractive” at current levels.
“Based on our forecasts, Coinbase is currently trading at an EV/EBITDA multiple of 2.0x on 2024 EBITDA,” wrote MoffettNathanson. “By comparison, Coinbase’s peer set of Fintechs and Exchanges are trading at median EV/EBITDA multiples of 19.2x and 14.2x, respectively, on 2024 EBITDA. Why? Presumably, because the market doesn’t believe in the outlook for Coinbase’s 2024 EBITDA.”
However, the firm, which has an Outperform rating and $200 price target on Coinbase shares, said in its forecast for 2024 EBITDA, they assume that the “crypto ‘winter’ ends at some point late in 2023,” consistent with prior downcycles, and “Coinbase’s revenues and trading volumes begin to surge in 2024.”
“We’re estimating $5.7 B in 2024 EBITDA – a figure that is only 35% above Coinbase’s FY21 EBITDA, but requires a rapid surge (like those we have seen in prior cycles), after nearly flat EBITDA in FY22 and FY23. So, the implication is that to believe in Coinbase’s stock, you have to believe that the current crypto ‘winter’ will, in fact, end – likely sometime over the next 12-18 months – and Coinbase’s business will recover,” MoffettNathanson added.
Three factors give MoffettNathanson confidence that the current crypto ‘winter’ will likely end sometime in the next 12-18 months, and Coinbase’s business will likely surge when it does, including the crypto market being historically cyclical, Coinbase’s revenues beginning to stabilize, and Coinbase’s key ‘health’ metrics, all being “sound.”
Coinbase shares are up 1.6% in early Monday trading.
