Barclays rates Coinbase stock Underweight ahead of Q2 earnings

Investing.com -- Barclays Bank has adjusted its valuation and target price for Coinbase Global (NASDAQ:COIN) as it saw few positive drivers for the America’s largest cryptocurrency exchange ahead of Q2 earnings. The investment bank has kept the stock at an "Underweight" rating, while keeping a positive outlook on the broader industry. 

Most recently, on July 10, Barclays lowered the price target to $196, with Coinbase stock trading at $220.56. Coinbase shares were quoted at $233 in premarket trading at the time of publication.

Barclays has made several adjustments to Coinbase's price target over the past year. On April 8, the target was lowered to $179, while the closing price was $249.61.

Barclays' current price target of $196 is based on a valuation of 30 times the estimated adjusted earnings per share (EPS) for 2025. Coinbase, which reports second-quarter earnings after the close on August 1, is expected to report this figure at $6.52.

Elsewhere, Barclays highlighted strong net outflows for recently approved spot Ethereum ETFs, totaling $341 million this week. Excluding Grayscale-related outflows, inflows were around $1 billion. 

Since trading started on the spot Ethereum ETFs last week, net outflows have hit $341 million. Grayscale saw the biggest chunk of these outflows, with $1.5 billion leaving its Ethereum trust, but this was partly offset by $164 million flowing into their mini Ethereum trust. This rotation is not surprising, given the lower fees associated with the mini trust.

Meanwhile, BlackRock's ETF saw the strongest inflows, totaling $442 million. Bitwise followed with $266 million, and Fidelity saw inflows of $219 million. The aggregate spot Ethereum ETF assets under management (AUM) fell by 10% overall, partly due to a 7% decline in spot Ethereum prices, which contributed to the outflows.

Coinbase, serving as the custodian and prime broker for six Ethereum ETFs and eight spot Bitcoin ETFs, stands to benefit from growth in AUM and increased redemption and creation activity. However, the company could face heightened competition for trading volumes.

Trading volumes for Ethereum ETFs have been pretty impressive compared to crypto exchange volumes, the report notes. On average, these volumes make up about 6% of spot crypto volumes since trading started. 

"ETF volumes are relatively small compared to spot exchange volumes, and do not necessarily translate to on-exchange Ethereum trading," Barclays explained.