- Morgan Stanley cuts Circle stock target to $38 from $106.
- USDC growth forecasts reduced for 2027 and 2028.
- TD Cowen starts coverage with a bullish $82 target.
Circle stock came under pressure after Morgan Stanley downgraded the stablecoin issuer to Underweight and reduced its price target from $106 to $38. The bank cited slower USDC circulation growth, increased competition from tokenized financial products, and pressure on Circle’s reserve income model.
Circle shares dropped about 6% in premarket trading after the report. The move came as another Wall Street firm, TD Cowen, initiated coverage with a Buy rating and an $82 price target.
Circle Stock Faces Pressure From Slower USDC Growth
Morgan Stanley lowered its expectations for USDC expansion, reducing its circulation forecasts by about 33% for 2027 and 44% for 2028. The brokerage also lowered earnings estimates, projecting figures below market expectations for future periods.
According to analyst James Faucette, Circle’s current revenue model remains closely linked to reserve income generated from USDC-backed assets. The report highlighted growing competition from tokenized money market funds, tokenized deposits, and OpenUSD initiatives.
Meanwhile, Morgan Stanley said stablecoin payment activity remains limited compared with overall transaction volumes. The firm noted that much of stablecoin activity still comes from crypto trading and transfers rather than traditional commerce.
Circle Stock Outlook Divides Wall Street, Analysts
TD Cowen presented a different view of Circle stock, initiating coverage with a Buy rating. The firm argued that investors may be overlooking Circle’s broader financial infrastructure strategy beyond stablecoin issuance.
TD Cowen highlighted Circle’s expansion into payments, treasury services, tokenized assets, interoperability solutions, and developer infrastructure. The firm expects fee-based revenue streams to become increasingly important as the company develops new products.
Notably, Circle recently strengthened its regulatory position after receiving a limited-purpose trust charter from the New York Department of Financial Services for Circle Internet Trust Company.
The regulatory development followed Circle’s federal trust bank authorization from the Office of the Comptroller of the Currency. However, Morgan Stanley’s report focused on future earnings sensitivity linked to USDC adoption, competition, and changing stablecoin market dynamics.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.
