Bernstein Stands Firm on Circle Rating Despite Stablecoin Competition Concerns

Research firm Bernstein has reaffirmed its Outperform rating and $140 price target on Circle following the stablecoin issuer's second-quarter earnings report. The analysts argue that Circle's Q2 results form a 'counter thesis to the bears,' as they topped expectations in several key areas.

Circle reported revenue of $701 million for the quarter, up 7% year over year but slightly below consensus estimates. However, adjusted EBITDA and basic earnings per share both exceeded analyst projections, driven largely by robust reserve income. Reserve income accounted for approximately 95% of Circle's Q2 revenue.

Bernstein analysts led by Gautam Chhugani addressed two primary concerns weighing on the stock: growing competition in stablecoins and the sustainability of Circle's reserve income in the current rate environment. They contend that investors may be underestimating USDC's long-term potential, as well as Circle's advantages in distribution, liquidity, and regulatory position.

The analysts highlighted several key developments during the quarter, including new partnerships and infrastructure initiatives. These include national trust bank approval, growth of the Circle Payments Network, and the upcoming launch of the Arc public mainnet on September 16. The mainnet will feature founding validators such as BlackRock and Visa, among others.

Bernstein also noted that management has increased its guidance for other revenue and revenue-less-distribution-cost margins in 2026, reflecting expected recognition of $180 million in Arc token presale revenue. The analysts believe that prospective revenue from Arc staking, gas fees, and partnership activity is not yet reflected in current forward estimates.