JPMorgan Initiates Circle Coverage With 55% Price Decrease Forecast

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 represents a 55% decrease from the current CRCL price of $180.

The analysts at JPMorgan noted that their price target reflects a substantial premium to the IPO price of $31, but also a significant discount to the current share price of $180. They expect Circle to have a market capitalization of approximately $21 billion by late 2026, which is a notable decrease from its current valuation of $43.8 billion. This valuation shows massive growth after CRCL shares started trading on the New York Stock Exchange (NYSE) with an $8 billion market cap on June 5.

JPMorgan analysts view Circle as well-positioned in the nascent stablecoin market, given its early-mover advantage and numerous use cases. However, they suggested that its current market capitalization is elevated and could face potential threats from competition. The analysts mentioned that direct stablecoin competitors, as well as other crypto investment products like tokenized deposit accounts and digital money market funds, could harm the company’s market value in the coming months. They also highlighted the risk of a few competitors succeeding in taking enough market share to reach critical mass, allowing them to leverage the network built by Circle.

In addition to competition, JPMorgan identified US stablecoin regulations as a potential risk. These regulations may soon require issuers like Circle to hold equity capital based on the amount of stablecoins in circulation, similar to Europe’s Markets in Crypto-Assets (MiCA) regulation. While JPMorgan estimated Circle to have enough equity to support its USDC (USDC) stablecoin held in the US, the analysts suggested that higher capital requirements could restrict USDC growth. Furthermore, the development of central bank digital currencies (CBDCs) poses risks, as further global CBDC adoption, particularly in Europe, could impact Circle’s ability to scale globally, adversely affecting long-term growth and profitability.