Morgan Stanley Turns Bearish on Coinbase, Cutting Price Target by More Than Half

Morgan Stanley (NYSE: $MS) downgraded Coinbase (NASDAQ: $COIN) to underweight from equal-weight on Monday and cut its price target to $120 from $258, warning that the crypto exchange’s earnings may recover more slowly than expected.

The call piles onto a rough week for the stock. Coinbase fell 10.6% on Friday to $143.54, its lowest close in more than two years, after third-quarter results beat on earnings but missed on revenue, and it extended losses Monday to $137.83. Analysts overall still rate the stock a buy, with an average target near $185.22, according to Cryproprowl, so Morgan Stanley’s target sits far below the Street’s. It implies about 12.94% further downside.

“Confidence in the earnings recovery has deteriorated,” analyst Michael Cyprys wrote in a note. He pointed to recent trading trends, a softer revenue outlook and uncertainty in the crypto market after the $6.3 billion hack of Binance. He added that the breach could weaken trust in centralized exchanges and bring greater regulatory scrutiny, Coin Edition reported. Morgan Stanley still sees Coinbase as one of the strongest competitors in crypto.

The bank also cut its numbers. Coinbase’s third-quarter revenue of $1.22 billion came in 6% below Morgan Stanley’s estimate, and the bank lowered its revenue forecasts for 2027 and 2028 by 28% and 18%. Estimates for earnings before interest, taxes, depreciation and amortization fall 47% for 2027 and 25% for 2028. Cyprys also trimmed the multiple applied to Coinbase’s projected EBITDA to 12 times from 20 times, which, together with the lower forecasts, explains much of the target cut.

Other analysts had already trimmed targets last week. Barclays cut its target to $120 from $149, saying weaker revenue and higher costs could force a sizeable cut to near-term EBITDA estimates. Needham lowered its target to $197 from $205 and kept its buy rating, and Cantor Fitzgerald cut its target to $200 from $212. Rosenblatt’s Chris Brendler took a more upbeat view, calling the results the clearest evidence yet that Coinbase’s “Everything Exchange” strategy is working.

Coinbase reported third-quarter revenue of $1.22 billion, down 35% from a year earlier, as trading slowed. Net income was $719 million, mostly from gains on crypto it holds as an investment, while adjusted net income was $78 million.

Shares of Coinbase (NASDAQ: COIN) are currently trading at $137.83.