Morgan Stanley downgraded shares of Circle Internet (CRCL) to underweight from equal-weight on Monday and cut its price target to $38 from $106, citing a weaker long-term earnings outlook.
The stock, which slid 6% following the report, has fallen about 30% year-to-date, reflecting growing investor concern over the outlook for USDC, the company’s dollar-backed stablecoin and its largest source of revenue.
Analyst James Faucette said Morgan Stanley expects slower USDC growth as reserve income comes under pressure and Circle shifts toward lower-margin transaction revenue.
“We downgrade Circle, as USDC contraction exposes reserve income sensitivity and points to a lower-margin shift toward transaction revenue,” Faucette wrote in a research note.
The bank reduced its USDC supply forecasts by roughly 33% for 2027 and 44% for 2028, resulting in GAAP earnings-per-share estimates that are about 3% below Wall Street consensus in 2027 and 20%…
