Compass Point Downgrades Circle to "Sell," Lowers Price Target to $77

BlockBeats News, April 11th. According to Barrons, Compass Point analysts downgraded Circle's rating from "Neutral" to "Sell" in a report on Thursday, and slightly lowered the target price from $79 to $77. The report noted that while the supply of the company's flagship stablecoin USDC has remained stable over the past few months, growth is mainly coming from low-margin areas.

The analysis pointed out that since early February, nearly 80% of the growth in USDC supply has come from platforms such as Sky, Binance, and Ethena. These platforms have distribution agreements with Circle but take a portion of the USDC reserve interest income, thereby compressing the company's earnings. In contrast, Circle has higher-margin holdings of "off-chain" USDC that are not circulating on these platforms. This means that investors may face unfavorable results in the first quarter earnings report expected at the end of May or early June. Analyst Ed Engel said, "CRCL's first-quarter performance may fall short of the market's gradually rising expectations." Compass Point expects Circle's first-quarter EBITDA to decline by 19% QoQ and has lowered its 2027 fiscal year EBITDA expectations to about 20% below market consensus.

However, if the overall crypto market rises, Circle's prospects may improve. Although USDC is pegged to the dollar, increased on-chain activity will drive up stablecoin circulation, thus increasing the use of high-margin platforms. Currently, Wall Street remains generally optimistic about Circle. Of the 27 analysts surveyed by FactSet, 48% rated it as "Buy," 44% as "Hold," with an average target price of $131.29.