Coinbase IPO

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Coinbase's stock could be helped by a continued acceleration in cryptocurrency trading volume, according to Mizuho's Dan Dolev.

The managing director and his associate Ryan Coyne upgraded their price target for Coinbase to $315 from $285. That's about an 11% gain from current levels as of Tuesday afternoon.

The analysts explained that "crypto exuberance" drove elevated trading volumes on Coinbase that nearly matched the record first quarter during the month of April. If that trend continues, they expect second quarter revenues to top consensus estimates by as much as 35%.

"Consensus currently models 2Q revenue to be down -36% vs. 1Q levels. This is despite strong 2Q volumes, which in April were nearly on par with 1Q levels. If this trend continues in May and June, it could translate into $400-450mn potential upside to consensus sales," Mizuho analyst said.

However, the analysts stressed caution over the cryptocurrency exchange's medium-term outlook. With 80% of Coinbase's sales relying on retail trading commissions, the app may face downward pressure from competing platforms if crypto-moves to zero-commission trading like stocks did.

Coinbase fell as much as 6.3% to $275 before paring some losses Tuesday. The cryptocurrency exchange has shed over 14% since going public in April.

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