Bernstein calls Coinbase ‘the most misunderstood crypto stock', raises PT to $510

Bernstein reiterated an Outperform rating on Coinbase, raising its price target to a Street-high $510, implying nearly 50% upside, citing the company's underestimated evolution into a "crypto universal bank." This bullish outlook is driven by Coinbase's diversified revenue streams, with non-trading income now 42% of 2024 revenue, strong growth in stablecoins and institutional services, strategic acquisitions like Deribit, and favorable legislative tailwinds, positioning it as a dominant player in the maturing crypto financial services landscape.

Analysis

Bernstein has issued a highly bullish outlook on Coinbase (COIN), raising its price target to a Street-high of $510 and reiterating an Outperform rating. The core of their thesis is that the market misunderstands Coinbase's evolution from a simple retail exchange into a diversified "crypto universal bank." This transformation is evidenced by a significant shift in revenue composition, with non-trading income from services like stablecoin interest, institutional custody, and staking growing from 14% of total revenue in 2020 to 42% in 2024. The firm's strategic expansion is further underscored by its $2.9 billion acquisition of Deribit, the world's largest crypto options exchange, positioning it to compete directly with Binance in the lucrative global derivatives market. Bernstein projects substantial growth, with revenues forecasted to reach $14.1 billion by 2027 and has increased its 2027 earnings estimate by 28% to $20.38 per share, justifying a higher valuation multiple of 25x projected earnings. This optimism is supported by positive legislative momentum, such as the GENIUS Act for stablecoins, and strong fundamentals, including an increasing spot trading market share (7.8% in Q1) and a stable retail take rate of 140 basis points, suggesting a resilient competitive moat.

Key Decisions for Investors

• Investors should evaluate Coinbase not just as a trading platform but as a diversified financial services entity, considering the growth in non-trading revenue streams which now constitute 42% of its total revenue.
• Monitor the integration and performance of the Deribit acquisition, as success in the derivatives market is a key pillar for achieving Bernstein's aggressive revenue and earnings forecasts.
• Track the progress of US crypto legislation, such as the GENIUS and CLARITY Acts, as their passage could serve as a significant de-risking catalyst and solidify Coinbase's competitive advantage as a regulated entity.
• Given the nearly 50% upside implied by the $510 price target and the stock's strong momentum, investors may consider the bullish thesis, while remaining mindful that achieving these targets depends on continued execution in a volatile market.