Investing.com -- Morgan Stanley initiated coverage of Coinbase at Equal Weight with a $250 price target in a note Thursday, saying the crypto platform has broadened well beyond its exchange roots but remains tied to the volatile crypto cycle.

Analyst Michael Cyprys said the target implies about 40% upside from current levels, but a wide $50-to-$400 range of potential outcomes justifies a neutral stance.

"We are more constructive on the franchise than the shares at current valuation," he wrote.

Cyprys noted that Coinbase has evolved from a Bitcoin-only venue into a full-stack platform spanning retail and institutional trading, custody, stablecoins, derivatives, staking, payments and onchain infrastructure, ending the second quarter with 7.6 million monthly transacting users and $246 billion of assets on the platform.

Even so, retail crypto trading, at about 40% of revenue, remains the key swing factor, he added.

The analyst forecasts a cyclical reset in 2026, a sharp rebound in 2027 and normalization in 2028, when he expects about $3.0 billion of adjusted EBITDA.

His price target is based on 21 times that estimate, in line with Coinbase's historical average and the digital-asset peer median.

Cyprys said regulatory clarity, the company's "Everything Exchange" push into assets such as equities and prediction markets, and its stablecoin and Base infrastructure all expand its addressable market, though they also invite more competition and gradual pricing pressure.

"Diversification should raise the earnings floor and provide more ways to monetize the customer relationship, but it does not eliminate the cycle," he wrote.