Clear Street has initiated coverage of Bakkt (BKKT), assigning a buy rating along with a price target of $14, indicating a potential upside of 44% after the stock experienced a significant decline of over 60% year-to-date. In comparison, the S&P 500 has posted an 11% gain during the same period. Early trading on Wednesday saw Bakkt’s shares rise by 0.7% to approximately $9.83.
In a research report, the brokerage highlighted Bakkt’s strategic shift to streamline its operations by removing non-core units such as Loyalty and Custody, focusing on becoming a blockchain-native payments platform. The stock is currently valued at a modest 2.9 times projected 2027 EV/EBITDA.
Bakkt’s business model is centered on two main components: Crypto Services intended for institutional clients and its Digital Transfer and Remittance (DTR) platform, which aims to develop a robust stablecoin payment infrastructure. The company is well-positioned within the $190 trillion cross-border payments market, bolstered by a strong regulatory foundation, a lean operational structure, and the high-margin potential of stablecoin transactions.
Clear Street analysts, led by Brian Dobson, forecast a 14% annual revenue growth through 2027, attributing much of this growth to the DTR platform, which is expected to enhance both scale and profitability. The DTR transactions are anticipated to generate nearly double the margins compared to traditional crypto services, spurring a projected 66% annual increase in gross profit. Furthermore, adjusted EBITDA is expected to become positive by early 2026, reaching $49 million by 2027 due to a $60 million cost optimization initiative.
The DTR platform is set to roll out in 36 countries by late 2025, with plans to expand into over 90 countries in 2026. Analysts estimate that transaction volume will hit $2.6 billion by 2027.
Bakkt’s institutional-first strategy focuses on partnerships with regulated entities like remittance firms and neobanks, steering clear of dependence on retail crypto adoption. With a robust compliance framework underscored by its BitLicense and over 50 state money transmitter licenses, Bakkt is poised for rapid scaling. Clear Street views Bakkt as an undervalued player in the stablecoin infrastructure space, suggesting it has significant upside potential based on its positioning and operational efficiencies.
On a related note, rival broker Benchmark also initiated coverage of Bakkt recently, granting a buy rating with a price target of $13.
