Bernstein Reaffirms Outperform Rating on Circle Amid Mixed Q2 Results

Circle's stock price rose on Thursday after analysts at Bernstein reaffirmed their Outperform rating and $140 target, citing mixed Q2 results that challenged bearish views. The brokerage argued that Circle's stablecoin issuer's growth in revenue and reserve income offset concerns about US interest rates affecting the company's returns.

The firm generated $701 million in Q2 revenue, a 7% increase from last year but slightly below estimates. Adjusted EBITDA rose 8% to $143 million, while basic earnings per share exceeded expectations at $0.19. Net income from continuing operations reached $48 million, an improvement of $530 million over the previous year's loss.

Bernstein analysts pointed out that USDC circulation grew 19% year-over-year but declined 5% quarterly to $73.3 billion. On-chain transaction volume increased by 151% to $14.8 trillion, suggesting faster growth in network activity than USDC adoption.

The brokerage also highlighted Circle's progress with its Arc blockchain and payments partnerships, which could provide revenue sources outside of interest earned on USDC reserves. The company plans to launch the public mainnet on September 16 with 11 institutional validators, including major financial institutions like BlackRock and Visa.