JPMorgan Initiates Circle Coverage With 55% Price Cut

JPMorgan, a prominent US investment bank, has initiated coverage of Circle (CRCL) shares with an underweight rating and a price target of $80 by December 2026. This assessment was presented in the “North America Equity Research” report, led by Kenneth Worthington. The forecasted target is based on a 45x multiple of projected 2027 earnings per share (EPS) plus a $10 premium for upside potential, which is down 55% from the current CRCL price of $180.

JPMorgan’s analysts acknowledge Circle’s strong position in the stablecoin market, citing its early-mover advantage and numerous use cases. However, they suggest that the current market capitalization of Circle is elevated. According to data, Circle is valued at $43.8 billion, reflecting significant growth since its shares began trading on the New York Stock Exchange (NYSE) with an $8 billion market cap on June 5. The analysts’ price target of $80 by late 2026 implies a market cap of approximately $21 billion, noting that the mid-point of the IPO was priced at $31 or an $8 billion market cap.

JPMorgan analysts identified several potential threats to Circle’s market value, including competition from other stablecoin issuers and crypto investment products like tokenized deposit accounts and digital money market funds. They warned that a few competitors could succeed in taking enough market share to reach critical mass, leveraging the network built by Circle. Additionally, the analysts highlighted the risk of US stablecoin regulations, which may require issuers to hold equity capital based on the amount of stablecoins in circulation, similar to Europe’s Markets in Crypto-Assets (MiCA) regulation. While Circle is estimated to have enough equity to support its USDC stablecoin held in the US, higher capital requirements could restrict USDC growth.

Furthermore, the development of central bank digital currencies (CBDCs) poses another risk. Although the US has taken a stablecoin-friendly approach, other countries could potentially add pressure to Circle’s global expansion. The analysts noted that further global CBDC adoption, particularly in Europe, could impact Circle’s ability to scale globally, adversely affecting long-term growth and profitability. Despite these challenges, JPMorgan’s underweight rating and $80 price target reflect a substantial premium to the IPO price but a significant discount to the current share price, indicating a cautious yet optimistic outlook on Circle’s future prospects.