In a notable development within the cryptocurrency sector, Clear Street has initiated coverage of Bakkt (BKKT) with a buy rating and a price target of $14, indicating a potential upside of 44% after a challenging year for the stock. This comes as Bakkt’s shares have dropped over 60% year-to-date, contrasting with an 11% increase witnessed by the S&P 500 index. Early Wednesday trading saw the stock slightly up at around $9.83.
To adapt to changing market dynamics, Bakkt has streamlined its operations by shedding non-core units, focusing instead on becoming a blockchain-native payments platform. According to the report, the company is currently trading at just 2.9 times its projected 2027 EV/EBITDA. Its redefined business model now supports two crucial pillars: Crypto Services aimed at institutional clients and the Digital Transfer and Remittance (DTR) platform, which seeks to establish a stablecoin payment infrastructure.
“Bakkt is strategically positioned to capture a share of the $190 trillion cross-border payments market, thanks to its strong regulatory standing and efficient cost structure,” analysts led by Brian Dobson stated.
Clear Street anticipates a robust 14% annual revenue growth through 2027, with the DTR platform being a key driver for both scale and profitability. Notably, stablecoin transactions are projected to yield margins nearly double those from crypto services, resulting in an impressive gross profit growth rate of 66% annually. By early 2026, adjusted EBITDA is expected to turn positive, potentially reaching $49 million by 2027 following a cost reset of $60 million.
The DTR platform is on track to launch in 36 countries by late 2025, aiming for an expansion to over 90 countries in the following year, with transaction volumes expected to hit $2.6 billion by 2027. Bakkt’s business strategy prioritizes institutional partnerships over retail crypto adoption, aligning with regulated partners such as neobanks and remittance firms.
“With over 50 state money transmitter licenses and a BitLicense, Bakkt boasts one of the strongest compliance frameworks in the U.S., facilitating rapid growth,” the broker emphasized.
Meanwhile, rival broker Benchmark has also commenced coverage of Bakkt, offering a buy rating and a price target of $13. As Bakkt continues to refine its focus on high-margin stablecoin operations, it remains positioned as a potentially undervalued player in the cryptocurrency infrastructure landscape.
Bakkt Coverage Initiation and Market Potential
Key insights from Clear Street’s coverage of Bakkt (BKKT) and its implications for investors:
- Buy Rating and Price Target:
- Clear Street initiated coverage with a buy rating.
- Projected price target of $14 implies a 44% upside from current levels.
- Steep Decline and Recovery Potential:
- Shares have declined over 60% year-to-date compared to an 11% gain in the S&P 500 index.
- Current trading at approximately $9.83, showing early signs of recovery.
- Business Streamlining:
- Bakkt has shed non-core units to focus on a blockchain-native payments platform.
- Currently operates on two main pillars: Crypto Services for institutions and Digital Transfer and Remittance (DTR).
- Market Opportunity:
- Targeting the $190 trillion cross-border payments market.
- Strong regulatory compliance helps in scaling operations effectively.
- Revenue Growth and Profitability:
- Projected 14% annual revenue growth through 2027.
- DTR expected to drive scale and profitability, with a forecasted $2.6 billion in transaction volume by 2027.
- Adjusted EBITDA expected to become positive by early 2026.
- Institutional-First Model:
- Avoids reliance on retail crypto adoption, targeting regulated partners like remittance firms and neobanks.
- Possesses one of the strongest compliance frameworks in the U.S. with BitLicense and 50+ state licenses.
- Rival Analysts’ Perspective:
- Benchmark also initiated coverage with a buy rating and a $13 price target.
Bakkt’s Strategic Shift: Analyzing Competitive Positioning
Clear Street’s recent initiation of coverage on Bakkt (BKKT) with a buy rating at a $14 price target signals optimism in a turbulent market. This comes in stark contrast to the company’s performance this year, having dropped over 60% while the S&P 500 sees an 11% gain. Despite this steep decline, the report underscores Bakkt’s pivot by shedding non-core units and focusing on a blockchain-native payments platform, which could be a double-edged sword in the competitive landscape.
Competitive Advantages: The most notable edge for Bakkt lies in its solid regulatory footing, boasting a BitLicense and over 50 state money transmitter licenses. This positions the firm as a compliant player in a crowded market, enabling faster scalability, especially within the institutional sector. Additionally, Bakkt’s streamlined operations are projected to yield a remarkable 14% annual revenue growth through 2027, driven primarily by its Digital Transfer and Remittance (DTR) platform. By targeting high-margin stablecoin transactions, the anticipated profitability is significantly enhanced, with gross profit growth soaring to 66% annually.
Competitive Disadvantages: However, the narrow focus on institutional clients may exclude a substantial segment of retail investors who are increasingly engaging with crypto assets. Rival firms like Benchmark, which also initiated coverage with a similar buy rating but a slightly lower price target, point towards an already saturated crypto services market. Bakkt’s reliance on stablecoins, while profitable, might be vulnerable to regulatory changes and market fluctuations that could adversely impact its operational framework.
These developments could benefit institutional players looking for reliable partnerships in the crypto realm, such as remittance firms and neobanks, who would appreciate the risk mitigation offered by Bakkt’s compliance strengths. On the other hand, Bakkt’s distance from retail crypto adoption might pose challenges, particularly if broader market dynamics shift towards consumer-facing strategies. Firms that fail to adapt to rapidly changing consumer preferences could find themselves at a disadvantage in capturing market share.
