5 Market-Moving Analyst Calls: Why Coinbase Is a Buy | Pro Recap
2023.04.30 04:50
Let’s cut through the noise of the past week with a Pro Recap of the top analyst takeaways that may very well forecast the next major market trend: buy initiations for Coinbase and MicroStrategy; downgrades for C3.ai and Vornado Realty; and an upgrade for Euronav.
All of these analyst calls were broadcast in real time to InvestingPro subscribers. Start your free 7-day trial to make sure you always know first, too.
Coinbase
What happened? Midweek, HC Wainwright started coverage on Coinbase (NASDAQ:) at Buy with a $75 price target.
What’s the full story? HC Wainwright sees value in the crypto-exchange platform, noting:
…shares now trade at just 3.6x 2023E revenue, a 35% discount to historical levels.
Further addressing the valuation play here, the brokerage wrote:
…all key metrics that drive Coinbase’s operating results, namely transaction revenues which account for 75% of total net revenues and grew an exponential 524% y/y in the 2021 bull market.
How did the stock react? After InvestingPro’s real-time headline Wednesday morning, subscribers were able to jump on shares’ premarket spike – which peaked at $59.51 at market open – before the stock sold off to a $53.89 close in the regular session.
MicroStrategy
What happened? Staying in crypto plays, on Friday Berenberg initiated on MicroStrategy (NASDAQ:) with a Buy rating and $430 price target.
What’s the full story? Berenberg’s report was over 40 pages, but the succinct summation comes in one bullet point with two sentences:
Considering the regulatory threat that hangs over much of the crypto industry, rising concerns about de-dollarization, and the approach of the bitcoin halving, we believe equity investors should consider investing in shares of MSTR; we view the stock as offering the most attractive means through which many of them would be able to express a view on bitcoin. As the mandates of many institutional investors preclude them from purchasing bitcoin directly, MSTR offers an alternative, with a correlation to bitcoin of 0.90.
How did the stock react? Shares rose from a $313 handle on the regular session open to close Friday at $328.38, a gain of roughly 3%.
C3.A1
What happened? Moving to the AI patch, on Monday Wolfe Research downgraded C3.ai Inc (NYSE:) to Underperform with a $14.00 price target.
What’s the full story? Wolfe wrote:
…despite the recent outperformance in shares, we are updating our FY24 growth outlook to 11%, significantly lower than consensus at 20%, which we believe warrants downside to its current multiple of 7.2x EV/FY24 Sales on consensus estimates.
Which is fair enough: It seems anything that has “AI” in the name, or which generally relates to AI tools, has traded at a valuation premium over the past 14-30 days. As happens in most new technology cases, everyone overvalues the potential because the online articles utilize attention-grabbing headlines to generate clicks and are merely a derivative product promotion in these early-early stages.
Wolfe notes that shareholders are pricing the stock for “near-perfect execution” by management:
While management is confident in its ability to exit FY24 with operating profitability and 30% revenue growth… we remain cautious and believe near-perfect execution and rates of adoption from new customers onto its consumption-based model are required to achieve this…
How did the stock react? Premarket, shares traded lower on the InvestingPro overnight real-time headline, which gave subscribers a chance to back out of their C3.ai holdings. The stock then opened Monday’s regular session at $18.43 before sliding even further throughout the day to close at $17.85 – a drop of 11% from Friday’s close.
Euronav
What happened? On Tuesday, Stifel upgraded Euronav (NYSE:) to Buy with a $22 price target.
What’s the full story? Stifel wrote:
Tankers are performing very well, aided by inefficient Russia-related voyages and tight supply, and we are upgrading EURN shares to Buy.
I have always liked Euronav since their IPO and one fun fact is they own TI Europe, which is the largest oil tanker in the world. The upgrade primarily comes on the heels of clarity related to the company’s merger being (NYSE:). Stifel penned:
We are also upgrading EURN to Buy as the uncertainty with respect to a potential merger has been resolved and shares can be valued on their own merits.
How did the stock react? Shares sold off from $17.59 on Tuesday’s regular session open to $17.26, a decline of more than 3%.
Vornado Realty
What happened? Finally, on Thursday, Piper cut shares of Vornado Realty Trust (NYSE:) to Underperform with an $11 price target.
What’s the full story? The downgrade is primarily a call on the suspension of the company’s dividend, with Piper writing:
We are downgrading VNO to UW from Neutral given the surprise common dividend suspension. While we understand many REITs, including VNO, aren’t being recognized for outsized dividend yields while internally generated cash is the cheapest source of financing, we believe a complete suspension this early in the year suggests more going on inside 888 Seventh Avenue than the Street appreciates.
How did the stock react? Shares sold off in Thursday’s premarket to open the regular market session around $13.25, down sharply from the prior close of $14.93, after InvestingPro’s real-time headline on the news. Share rebounded throughout the day, however, and closed fractionally lower at $14.81.
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