Coinbase Global (COIN) stock has been downgraded by an equity research analyst just hours before the cryptocurrency exchange is scheduled to report its first-quarter financial results on May 8. Concerns about potentially disappointing earnings led to the rating adjustment.
Gus Galá, an analyst at Monness, Crespi, Hardt & Co., lowered his rating on COIN stock to neutral from Buy. He also removed his previous $275 price target on the shares.
Galá described the downgrade as a "tactical move" before the earnings announcement. He indicated that he anticipates either an earnings miss or revised guidance downward from Coinbase, outcomes that could pressure the share price and potentially offer a better entry point for investors. While down 21% on the year, Coinbase stock has gained 25% over the past month after reaching a 52-week low in early April.
As a leading cryptocurrency exchange, Coinbase generates most of its revenue through transaction fees. Market volatility persists, causing many investors to move cash to the sidelines, which analysts note could negatively impact the exchange's revenue performance in the first quarter.
Future regulatory clarity remains a point of discussion for the crypto market. Former President Donald Trump has discussed policies seen as potentially crypto-friendly, aiming to position the United States as a leader in the space. However, legislative efforts in Congress face hurdles, according to Galá.
Despite the recent downgrade, Coinbase Global stock holds a consensus Moderate Buy rating among 22 Wall Street analysts tracked by Tipranks. This rating is based on a breakdown of 12 Buy, nine Hold, and one Sell recommendations over the last three months. The average COIN price target from these analysts is $271.05, which implies a potential upside of 37.59% from current levels.
In his note, Galá stated: "We expect an earnings miss or downwardly revised guidance from Coinbase."
