Morgan Stanley Lowers Circle's Price Target from $106 to $38

BlockBeats News, August 3rd, Morgan Stanley downgraded Circle (CRCL) stock rating from "Hold" to "Sell" and significantly lowered the price target from $106 to $38.

Morgan Stanley analyst James Faucette stated that the downgrade was mainly due to the contraction of USDC's circulation highlighting the sensitivity of the company's reserve revenue and indicating Circle's business is transitioning to a lower-margin transaction revenue model.

The report mentioned that Morgan Stanley has reduced its USDC scale forecasts for Circle by approximately 33% and 44% (corresponding to 2027 and 2028), with the company's GAAP EPS expected to be about 3% and 20% below market consensus.

The analyst pointed out that tokenized money market funds and bank deposit products may exert pressure on the USDC balance and revenue sharing ratio, while Circle's USYC product's economic model is relatively weak. Additionally, the agency payment business is currently limited in scale, with transaction volumes declining to approximately $41,900 daily, implying an average transaction amount of around $0.24.

Morgan Stanley also stated that Open USD adopts a shared governance and reserve revenue model, which may increase Circle's cost of maintaining USDC distribution channels.