Morgan Stanley bearish on Coinbase, slashes target on weaker recovery

 Morgan Stanley cut Coinbase to Underweight from Equal-weight and lowered its price target to $120 from $258 in a note to clients on Monday. 

The bank said confidence in an earnings recovery has deteriorated.

“While Coinbase continues to execute on its broader strategy, recent trading trends, a softer forward revenue outlook and uncertainty around the backdrop for crypto in the context of the recent Binance hack suggest a weaker recovery than we previously anticipated,” analyst Michael Cyprys wrote.

Coinbase’s third-quarter revenue of $1.22 billion came in 6% below Morgan Stanley’s forecast. Transaction revenue through Oct. 25 implies a fourth-quarter run rate of about $607 million, roughly 50% below the bank’s prior estimate and 11% below consensus.

Cyprys said the roughly $6.3 billion Binance security breach could weigh on confidence in centralized crypto platforms and lead to greater regulatory scrutiny, even though Coinbase was not directly affected.

Morgan Stanley cut its 2027 and 2028 revenue forecasts by 28% and 18%, respectively, and lowered its adjusted EBITDA estimates by 47% and 25%. Its revised 2028 adjusted EBITDA forecast of $2.4 billion is 14% below 2025 levels.

“The revised outlook is therefore a less pronounced recovery rather than a return to prior-cycle earnings,” the analyst said.

He noted that Coinbase continues to diversify, with prediction markets exceeding $200 million in annualized revenue. However, retail spot trading still accounts for about 40% of the bank’s 2027 revenue forecast.

“While we continue to view Coinbase as one of the best-positioned platforms in crypto, we see greater downside risk to earnings and valuation, supporting our downgrade to UW,” Cyprys said.