Coinbase (COIN) is more than just a crypto trading platform, Wall Street broker Cantor said in a research report Tuesday, initiating coverage of the stock.

Cantor assumed coverage of the crypto exchange with an overweight rating and a $245 price target. In early trading, the shares were up more than 5%.

"Markets are missing what it is doing beyond trading, particularly with its L2 (Base) and its stablecoin relationship with Circle," analysts Brett Knoblauch and Thomas Shinske wrote. Coinbase shares are attractive at current levels, as they are trading at around a 32% discount to historical valuation multiples, the report added.

The broker sees both these segments as "instrumental in changing the narrative surrounding COIN, from being a cyclical crypto trading platform to being a mission-critical infrastructure of the crypto economy."

The report said the shares are expected to re-rate higher once investors have increased visibility into the earnings potential of Base and stablecoins.

Base gives Coinbase an edge, the report said. The layer 2's strong user growth creates a "flywheel effect" that benefits the crypto exchange with more transaction fees.

Cantor said the stablecoin opportunity is also being underappreciated by the market, especially given the potential for these cryptocurrencies to displace traditional finance cross-border payment rails.

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