Analysts initiate Circle, some cautious on lofty valuation amid stablecoin boom
Investing.com -- Analysts initiated coverage of Circle, the company behind USD Coin, with opinions diverged sharply as the stock’s meteoric rise collided with questions about how much growth is already priced in.
Shares were around $181 in Monday premarket trading, nearly six times their $31 IPO price on June 5
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Both argued that a regulatory head‑start, deep liquidity and partnerships give Circle a durable edge as stablecoins move from crypto exchanges into mainstream payments and capital markets.
JP Morgan struck a more cautious tone, initiating at Underweight with an $80 target. While acknowledging Circle’s early‑mover advantage and management strength, the brokerage said the current market value, roughly $34 billion, looks stretched against an addressable market that may take years to materialise.
Oppenheimer began at Perform, also pointing to valuation after the stock’s four‑week surge.
The brokerage advised investors to await legislative clarity on U.S. stablecoin rules, upcoming earnings and the expiration of insider lock‑ups for a better entry point.
All four firms see ample room for stablecoin adoption. Bernstein projects industry supply could swell to about $4 trillion over the next decade, with Circle capturing as much as 30%.
Barclays called regulatory progress and network effects “a steady drumbeat” that should broaden use of USDC beyond the crypto sphere.
Analysts likewise flagged risks like rising competition from tokenised bank deposits and money‑market funds, sensitivity to U.S. interest‑rate cuts that would trim float income, and heavy reliance on partners such as Coinbase (NASDAQ:COIN) and Binance.
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The recent influx of analysts initiating coverage on Circle during the stablecoin boom raises hopes for sustained growth in this sector, yet it has also illuminated concerns regarding exorbitant valuations that could hinder long-term prospects.
In the midst of the booming stablecoin market, analysts have begun to take notice with cautious optimism about Circle despite its lofty valuation due diligence.
As stablecoin adoption soars amid a bullish market, analysts have initiated coverage on Circle with some expressing caution over its lofty valuation in comparison to the growing potential of this nascent asset class.
