Morgan Stanley Slashes Circle Target to $38, Citing Cooling USDC Momentum

Circle shares came under fresh pressure after Morgan Stanley downgraded the stablecoin issuer to "Underweight" from "Equalweight" and cut its price target to $38 from $106. The bank pointed to slower projected growth in USDC circulation, rising competition from tokenized financial products, and increasing strain on Circle's reserve-income-driven business model. The report sent Circle stock down about 6% in premarket trading. Morgan Stanley also trimmed its outlook for USDC expansion, lowering its circulation forecasts by roughly 33% for 2027 and 44% for 2028. The firm reduced earnings estimates as well, projecting results below broader market expectations in coming periods. Analyst James Faucette noted that Circle's revenue remains closely tied to reserve income generated from USDC-backed assets. Competition is intensifying, the bank said, citing tokenized money market funds, tokenized deposits and OpenUSD initiatives. It also argued that stablecoin payment usage remains relatively small versus overall transaction volumes, with much of today's activity still concentrated in crypto trading and transfers rather than everyday commerce. Wall Street is split. TD Cowen initiated coverage on Circle with a "Buy" rating and an $82 price target, saying investors may be undervaluing Circle's broader push to build financial infrastructure beyond stablecoin issuance. TD Cowen highlighted expansion into payments, treasury services, tokenized assets, interoperability tools and developer infrastructure, and expects fee-based revenue to grow in importance as new products roll out. Circle has also recently bolstered its regulatory standing, receiving a limited-purpose trust charter from the New York Department of Financial Services for Circle Internet Trust Company. The move followed Circle's federal trust bank authorization from the Office of the Comptroller of the Currency. Morgan Stanley, in contrast, emphasized future earnings sensitivity tied to USDC adoption, competitive pressures and shifting stablecoin market dynamics. Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.