Coinbase stock upgraded by Raymond James despite long-term negative bias

© Reuters Coinbase (COIN) stock upgraded by Raymond James despite long-term negative bias

On Tuesday, Raymond James made a notable change in its rating for Coinbase (NASDAQ:), upgrading the cryptocurrency exchange from Underperform to Market Perform. The firm cited a shift in its near-term investment rating outlook, despite maintaining a long-term negative bias towards the company. The adjustment reflects a concession that the previous rating may no longer be suitable, given recent market dynamics.

Analysts have expressed significant concerns about Coinbase’s long-term earnings potential, pointing to factors such as the commoditization of its client offerings, uncertain future cryptocurrency valuations, and substantial regulatory risks. They also noted the possibility of a competitor introducing a disruptive pricing strategy, especially if the current cryptocurrency rally continues.

Despite these reservations, Raymond James acknowledged underestimating the impact of exchange-traded product (ETP) inflows on the overall valuations of cryptocurrencies, including Bitcoin. This underestimation has contributed to a strong performance in Coinbase’s share price. The firm suggests that as long as ETP inflows remain robust, the momentum in Coinbase’s stock is likely to continue.

The company’s upgrade reflects a complex view of the cryptocurrency market and Coinbase’s position within it. While long-term skepticism remains, current market conditions have prompted a reassessment of the stock’s near-term trajectory. Raymond James’ new rating indicates a neutral stance, stepping back from the more bearish Underperform rating previously assigned to Coinbase.