Morgan Stanley downgraded Circle Internet Group to Underweight and cut its price target to $38 from $106, citing slower USDC growth and pressure on reserve income. TD Cowen took the opposite stance, initiating coverage with a Buy rating. The split lands days before Circle's second-quarter earnings and just after the company secured a New York trust charter.
Morgan Stanley downgraded Circle Internet Group to Underweight from Equal Weight and cut its price target to $38 from $106 after cutting its long-term forecasts for USDC growth. Circle shares fell about 6% in premarket trading to $58.81 following the note, even as another Wall Street firm took the opposite view.
Morgan Stanley cuts USDC growth forecasts
The brokerage reduced its assumptions for USDC circulation by about 33% for 2027 and 44% for 2028, arguing the stablecoin has not expanded as quickly as previously expected. It also lowered its GAAP earnings-per-share estimates to around 3% below consensus for 2027 and roughly 20% below consensus for 2028.
Analyst James Faucette said Circle's reserve-income business faces rising pressure because tokenized money market funds and tokenized deposits could compete for the same capital that would otherwise sit in USDC. Morgan Stanley also said Circle's OpenUSD initiative adds shared governance and reserve economics that raise the cost of maintaining USDC distribution, while agentic payment activity has fallen to roughly $41,900 in daily volume, implying an average transaction size of about $0.24. The brokerage said USDC "effectively not grown" since the third quarter of last year, despite management's objective of averaging 40% annual growth across market cycles.
Real-world stablecoin payments still limited
Drawing on McKinsey data, Morgan Stanley noted that stablecoins processed roughly $35 trillion in adjusted transaction volume during 2025, with only about $390 billion tied to identifiable real-world payments. Most activity, the brokerage said, still reflects crypto trading and transfers rather than commerce.
TD Cowen bets on Circle as an infrastructure platform
TD Cowen countered by initiating coverage with a Buy rating and an $82 price target, with analyst Bryan Bergin arguing investors may be underestimating Circle's push into payments, treasury services and tokenized real-world assets. Wall Street remains split overall: LSEG data shows 16 of the 30 analysts covering Circle rate the shares Hold or Sell, while 14 recommend Buy or Strong Buy.
Regulatory wins haven't lifted the stock
The downgrade arrives days after Circle secured a limited-purpose trust charter from the New York Department of Financial Services, complementing the federal trust bank authorization it received from the OCC in July. Still, Circle shares ended July 31 down 2.54%. The same day, Cathie Wood's ARK Invest purchased 109,129 Circle shares across three exchange-traded funds. Circle reports second-quarter earnings on Aug. 5.
Source: crypto.news
Trading involves risk.
Risk Disclaimer
