By Samuel Indyk
Investing.com – Goldman Sachs (NYSE:GS) has initiated cryptocurrency exchange Coinbase (NASDAQ:COIN) with a ‘buy’ rating and a 12-month price target of $306, implying upside of 36%.
Analysts at the US investment bank believes Coinbase brings leverage to an ecosystem that is experiencing strong growth, driven by increasing adoption of digital currencies.
Secondly, Goldman Sachs believes that Coinbase provides a leading consumer platform with strong customer trends as well as a robust and rapidly growing institutional business.
A third reason for the ‘buy’ rating is that they believe Coinbase has an attractive business model that thrives on cryptocurrency volatility. Volatility in the cryptocurrency market has ratcheted up a notch in the last week or two, beginning with Tesla's (NASDAQ:TSLA) decision to stop accepting Bitcoin as payment and as China looks set to further restrict some crypto activities.
Finally, Goldman says that Coinbase brings significant opportunities to add additional features and capabilities.
On the cryptocurrency space as a whole, Goldman Sachs notes that the Coinbase’s longer-term fate will depend on the continued success or failure of cryptocurrencies as an asset class.
“While we believe the core business today offer an attractive growth profile with the potential to drive new high levels of profitability, we see significant white space for new initiatives to drive more stable and recurring revenue streams to complement the core trading business over the longer term,” Goldman Sachs analysts said.
Coinbase shares closed Friday’s trading session at $224.35. In early pre-market trade, shares are trading higher by 1.3%.