Morgan Stanley Slashes Circle Price Target Amid Stablecoin Competition Fears

Circle's shares suffered a decline of over 3% on Monday following Morgan Stanley's decision to downgrade the company to 'underweight' and lower its price target.

The bank cut Circle's price target from $106 to $38, citing concerns over slower growth in USDC circulation and increasing pressure on the stablecoin issuer's core revenue model.

Morgan Stanley analyst James Faucette noted that weaker-than-expected growth in USDC's circulating supply could weigh on the company's reserve income, which remains a key source of revenue. The bank cut its USDC supply forecasts by 33% for 2027 and 44% for 2028.

The downgrade adds to concerns raised by other firms such as JPMorgan about the growing competition in the stablecoin market. However, TD Cowen maintains a positive outlook on Circle, initiating coverage with a buy rating and an $82 price target.