‘Massive Disruptive Potential’: Benchmark Initiates Securitize Coverage With Buy Rating

Analysts at investment bank Benchmark initiated coverage of Cantor Equity Partners II on Tuesday, assigning a “Buy” rating to the firm that’s expected to merge later this year with Miami-based tokenization specialist Securitize.

The analysts described Securitize as “compelling pure-play investment on tokenization” that’s building a foundation for tomorrow’s capital markets through its end-to-end platform for digital representations of real-world assets like stocks and bonds. 

Benchmark analysts penciled in a $16 price target for Securitize, a projection that hinges on the firm’s ability to generate $178 million in sales by the end of next year. That involves widening its competitive moat through blue-chip partnerships, the analysts added. 

Benchmark’s assessment reflects an optimistic outlook for Securitize following a bevy of listings for crypto-related firms last year, amid tepid market conditions that have reportedly stalled similar moves among crypto-native firms like Kraken.

When Securitize signaled last October that it plans to debut on the Nasdaq via a merger with blank-check firm Cantor Equity Partners II (CEPT), the deal valued Securitize at $1.25 billion. On Tuesday, CEPT changed hands around $11, according to Yahoo Finance.

Benchmark analyst Mark Palmer has confidence in Securitize’s ability to hit that mark because there’s “a great deal of visibility with regard to the company’s future revenue streams,” including origination fees from companies tokenizing assets and recurring revenue from servicing costs.

“I think there’s a massive disruptive potential as it pertains to traditional finance and the ways in which capital markets have functioned up to this point,” he told Decrypt. “The concept here really is better and faster across the board, and I think it’s just a matter of time before the market begins to recognize the benefits both in terms of efficiency and settlement times.”

When Circle’s stock soared upon its Wall Street debut last year, analysts lauded the moment as indicative of investors’ growing interest in stablecoins. While dollar-pegged stablecoins have the potential to pressure payment incumbents, Palmer argued that the stakes are higher with Securitize because its platform effectively bypasses legacy clearing infrastructure like DTCC.

Last week, Securitize and the New York Stock Exchange said that they would collaborate on a platform for tokenized securities rooted in round-the-clock trading, underscoring efforts to modernize financial markets in line with the SEC’s vision for “Project Crypto.”

Some influential institutions are still warming up to tokenization, but BlackRock CEO Larry Fink has touted the technology publicly as the “next generation of markets” since 2022. Years later, the world’s largest asset manager led a $47 million strategic funding round in Securitize.

Benchmark analysts noted that Securitize’s platform already underpins BlackRock’s BUIDL, the industry’s largest tokenized money-market fund. Valued at $2.2 billion on Tuesday, the fund exists across eight networks, with a lion’s share issued on Ethereum and Solana.

Figure Technologies debuted on the Nasdaq last September. Although the company’s business focuses on turning Home Equity Lines of Credit (HELOCs) into tokenized assets, Palmer noted that Securitize “is not focused on a particular vertical or industry.” As a result, the firm’s total addressable market could be defined as $300 trillion in real-world assets, he said.

“Securitize is really focused on providing the process behind tokenization, from origination through servicing, in a way that’s applicable to a breadth of industry vertices,” he said. “That’s one of the things that distinguishes it.”