Investment bank H.C. Wainwright upgraded Coinbase (COIN) to buy from sell and raised its price target on the shares to $425 from $300 before the crypto exchange reported third-quarter earnings on Thursday.

The investment bank said its outlook for crypto prices had turned bullish as seasonal strength and growing institutional demand aligned with favorable regulatory momentum.

Coinbase posted better-than-expected results driven by a surge in trading activity, a rebound in asset prices and continued growth in its subscription and services business. Total revenue of $1.9 billion beat the $1.8 billion expected by FactSet analysts.

Coinbase shares were 0.6% lower in early trading, around $318.50.

H.C. Wainwright noted that despite the U.S. government shutdown, it sees a high likelihood that market structure legislation will pass the Senate by year-end. Such progress, the bank said, could serve as a major catalyst for Coinbase shares.

The analysts said they expected Coinbase to post stronger-than-expected results, with upside to consensus revenue forecasts driven by higher subscription and services income, improved retail trading spreads and contributions from the August acquisition of Deribit.

For 2025, the analysts now see total revenue of $7.4 billion, up from $7.1 billion previously, with adjusted EPS rising to $4.99 from $4.45. The higher $425 share price target reflects a 13.1x enterprise value-to-revenue multiple applied to its 2026 estimate of $9.1 billion.

The bank cautioned that risks include Coinbase’s reliance on retail trading, volatility in crypto asset values, shifting regulation and competition within the digital asset ecosystem.

Read more: Analysts Expect Strong Q3 for Coinbase But Disagree Sharply on Its Future