Circle Stock Tumbles on Contrasting Analyst Views Amid Stablecoin Growth Concerns

Circle Internet Group's shares plummeted by 6% in premarket trading on Monday due to conflicting analyst opinions.

Morgan Stanley downgraded Circle to Underweight from Equal Weight and reduced its price target to $38 from $106, citing slower-than-expected growth of the USDC stablecoin. In contrast, TD Cowen initiated coverage with a Buy rating and an $82 price target, highlighting potential for significant upside.

Morgan Stanley's downgrade was driven by concerns that the circulation of USDC will not meet Circle's 40% average annual growth target across market cycles. The brokerage reduced its forecasts for USDC circulation in 2027 and 2028 by 33% and 44%, respectively.

TD Cowen, on the other hand, sees a 'compelling combination' of attractive growth and diversification opportunities for Circle through USDC circulation, high-margin fee-based revenues, and Arc optionality. Analyst Bryan Bergin believes Circle's business is expanding beyond stablecoin issuance into a broader financial infrastructure platform.