Atlantic Equities downgrades Coinbase after rally, cites weak crypto volume

It’s time to step to the sidelines on Coinbase after its recent rally, according to Atlantic Equities. Analyst Simon Clinch downgraded Coinbase to neutral, but raised his price target, following the crypto exchange operator’s run-up. “While the tenets of our recent upgrade remain in place, the risk/ reward looks less attractive at this level given continued regulatory challenges ahead and the surprisingly weak volume backdrop,” Clinch wrote on Wednesday. “We are raising our target price to $80, reflecting the impact of higher crypto prices, but downgrading the shares to Neutral given the limited upside.” COIN 1D mountain Coinbase shares 1-day The analyst’s price target represents downside of about 10% for Coinbase shares from Tuesday’s closing price of $89.15. Coinbase was higher by 0.6% in premarket trading Wednesday. The crypto stock has rallied more than 150% this year, partly driven by hopes that the legal arguments brought against Coinbase by the U.S. Securities and Exchange Commission are weaker than expected. But the analyst pointed out that cryptocurrency volumes are currently low, even as high prices buoy investor sentiment. Additionally, the analyst said the market cap for stablecoin USDC has declined, also impacting Coinbase’s interest income line. “With these factors in mind, we are concerned that the outlook for the rest of FY23 may have deteriorated incrementally despite the strength in crypto asset prices over the past month,” Clinch said. “As such, we see risk of a near-term pullback in the shares.” —CNBC’s Michael Bloom contributed to this report.