Coinbase Upgraded to Neutral Ahead of Earnings at JPMorgan as Shares Surge

• Shares upgraded to neutral from underweight to reflect rising crypto prices.

• Coinbase stock rose as much as 8% in premarket trading.

• The crypto exchange reports earnings after the close.

JPMorgan (JPM) upgraded the shares of crypto exchange Coinbase (COIN) to neutral to reflect the recent surge in cryptocurrency prices following the approval of spot bitcoin (BTC) exchange-traded funds (ETFs) in the U.S., it said in a research report Thursday.

Higher crypto prices are expected to improve activity levels and Coinbase’s earnings power in the first quarter, the report said.

The Wall Street giant raised the stock to neutral from underweight with an unchanged price target of $80.

Coinbase shares rose 6.5% to $170.80 in premarket trading. Other crypto-related stocks also rose as bitcoin, the world’s largest cryptocurrency, was trading around its recent highs of $52,400. MicroStrategy (MSTR) rose 3% and Marathon Digital (MARA) gained 3.5%.

The approval of spot bitcoin ETFs, initially a sell-the-news event, “has now turned into meaningful bitcoin appreciation,” the bank said.

“We think this bitcoin appreciation is contributing to better spot bitcoin ETF flows, which is in turn driving bitcoin prices higher, and pulling other tokens higher as well,” analysts led by Kenneth Worthington wrote.

The bank cautioned that following the near-400% increase in the share price last year, Coinbase shares could underperform in 2024, based on its valuation analysis.

“We are still not recommending the stock, but we do acknowledge the impact enthusiasm and consequently the activity and volumes that the U.S. spot bitcoin ETFs has injected into the crypto ecosystem, pushing it out of its 2022 crypto winter,” the report added.

The company reports earnings after the close today.