Morgan Stanley Trims Circle Price Target to $38 Amid Stablecoin Growth Concerns

Morgan Stanley's downgrade of Circle has added to concerns about the stablecoin issuer's growth prospects.

The bank cut its price target for Circle to $38 from $106, citing slower-than-expected growth in USDC circulation and increasing pressure on the company's core revenue model.

Analyst James Faucette noted that weaker-than-expected growth in USDC's circulating supply could weigh on Circle's reserve income, which remains a key source of revenue. Utility beyond remittances and stablecoin-linked card spending has yet to gain meaningful traction, Morgan Stanley stated.

The bank cut its USDC supply forecasts by 33% for 2027 and 44% for 2028, resulting in GAAP earnings-per-share estimates that are now roughly 3% below Wall Street consensus for 2027 and 20% lower for 2028. The expansion of blockchain-based money market products by BlackRock also highlights the growing competition for capital in the tokenized financial market.

However, other analysts hold a positive view concerning Circle. TD Cowen initiated coverage with a buy rating and an $82 price target, arguing that the market may be placing too much emphasis on Circle's reserve income while overlooking potential growth in areas such as payments, treasury services, tokenized assets, and developer tools.