Citi Research Upgrades Coinbase to ‘Buy’, Predicts 30% Stock Surge

Citi Research has upgraded Coinbase’s stock to a “buy” rating, setting a new target price of $345. This optimistic forecast, indicating a potential 30% surge, is driven by changes in the US political and regulatory scenes.

Previously it gave a neutral rating to Coinbase. However, a legal development compelled the company to upgrade the rating.

Why Citi Research Gave a Buy Signal For Coinbase?

The firm’s decision follows shifts in the US election outlook and the Supreme Court’s landmark decision to overturn the Chevron precedent.

“We believe that the legal tool likely increases judicial scrutiny of the SEC’s regulation by enforcement strategy,” Citi Research said.

Coinbase’s stock performance has been strong, with a more than 64% increase year-to-date, surpassing the total cryptocurrency market’s growth of about 45%. This trend reflects rising investor confidence amidst ongoing regulatory challenges.

Read more: Coinbase Review 2024: The Best Crypto Exchange for Beginners?

Coinbase Price Performance vs. Crypto Total Market Capitalization. Source: TradingView

However, Citi Research also warns of potential hurdles. The continuation of the current administration’s enforcement approach could pose significant challenges for the industry. Despite these concerns, the prediction market Polymarket hints at a political shift, with a 62% chance of a Donald Trump victory that could potentially reshape the regulatory environment.

Moreover, Citi has upgraded Coinbase’s year-end revenue projections by 14% to roughly $5.9 billion and expects a 7% increase in adjusted EBITDA (Earnings before Interest, Tax, Depreciation, and Amortisation) to $2.9 billion.

Amid these financial forecasts, Coinbase has escalated its legal battle with the US Securities and Exchange Commission (SEC). The company recently filed a motion to compel the release of private emails from SEC Chairman Gary Gensler.

Read more: Who Is Gary Gensler? Everything To Know About the SEC Chairman

This legal maneuver follows a critique by US Judge Katherine Polk, who deemed Coinbase’s earlier subpoena efforts as “surprising and misguided.” Since then, Coinbase has refined its subpoena, hoping to solidify its position against the SEC’s allegations.

“Documents related to these communications bear directly on the claims the SEC now asserts and on Coinbase’s fair notice defense,” Paul Grewal, the Chief Legal Officer at Coinbase, said.