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Piper Sandler says there’s too much uncertainty around Coinbase , and investors need to stay away. The firm downgraded Coinbase to neutral from overweight, citing its recent lawsuit from the Securities and Exchange Commission in which the federal agency accused the company of operating as an unregistered broker and exchange. A lack of regulatory clarity also drove the downgrade, according to analyst Patrick Moley. He lowered his price target to $60 from $65, which implies shares drawing back 24.9% from Monday’s close. While Moley noted that Coinbase shares have soared 126% year to date — with the stock surging 55% since June 6, when the SEC filed the suit — he said the appreciation has “likely been driven by a combination of rising crypto prices and a number of large asset managers filing for spot Bitcoin ETFs (some of which have named COIN as custodian).” “However, rising crypto prices have not translated to increased trading volumes for COIN in recent quarters and the timing of a spot bitcoin ETF approval is anyone’s guess,” said Moley. The analyst expects Coinbase to post its lowest quarterly trading volumes and monthly transacting user totals in over two years for the second quarter. Shares were down more than 2.7% Wednesday during premarket trading. “Bottom line, while we continue to believe COIN is positioned to be a major player in the space when we do eventually get regulatory clarity in the US, we would like to see more progress on the regulatory front and a convincing turnaround in the underlying fundamentals of the business before becoming more positive on COIN,” Moley said. —CNBC’s Michael Bloom contributed to this report.
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