The recent hack of crypto exchange Bybit highlights the value of self-custody wallets, broker Benchmark said in a Wednesday report initiating coverage of Exodus Movement (EXOD).

The broker started coverage of the crypto wallet firm with a buy rating and a $38 price target. The shares rose 5.7% to $25.89 in early trading.

The Nebraska-based company has the "right product at the right time," wrote analyst Mark Palmer.

The need for self-custody was underscored in recent weeks, when crypto exchange Bybit was the subject of a hack of 400,000 ether (ETH), worth about $1.5 billion.

Exodus Movement has lost more than 60% of its market cap in the last five weeks, Benchmark noted, giving a compelling entry point for investors looking for exposure to a company with "strong operating momentum, the demonstrated ability to scale rapidly, and a tailwind from the accommodative stance toward the crypto space in the U.S.," the report said.

The recent weakness is not linked to concerns about the firm's operating performance, the report noted, as the company posted strong fourth-quarter results earlier this month.

Exodus Movement gets most of its revenue from its exchange aggregation feature, Benchmark said, and its "wallet-as-a-service" business leverages this technology in its crypto swap engine, which is integrated with platforms such as Ledger and Magic Eden.

The stock began trading on the NYSE American, the New York Stock Exchange's sibling market, in December last year.

Read more: SEC Approves Crypto Wallet Maker Exodus to List on NYSE American After Denying It in May

UPDATE (March 12, 14:29 UTC): Replaces lead image

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