Circle (CRCL), Target Price Downgraded...Wall Street Sees 'Payment Network' and Issues Buy Rating

▲ Circle, USDC, Stablecoin, USD/ChatGPT generated image

The target price for Circle (Circle Internet Group, CRCL) has been lowered consecutively. However, Wall Street maintained its buy rating, citing the launch of Arc and the expansion of its payment network.

According to Benzinga on August 6 (local time), Circle's stock price fell 3% after its Q2 earnings announcement. H.C. Wainwright analyst Mike Colonnese lowered the target price from $115 to $104. Needham analyst John Todaro also reduced it from $150 to $127. Both analysts maintained their buy recommendations.

Colonnese assessed that Circle's competitive foundation would be difficult for other companies to catch up with. Circle's network spans 35 blockchains and 185 countries. It holds over 55 licenses and has more than 150 distribution partners. The distribution agreement with Coinbase was also renewed without changing existing terms.

Q2 revenue was $701.3 million, falling short of H.C. Wainwright's estimate of $713.1 million. This was due to a 5% decrease in USDC circulation from the previous quarter, totaling $73.3 billion. Circle raised its 2026 other revenue forecast to $310 million-$330 million. However, Colonnese pointed out that $180 million of this is from Arc token pre-sales and should be distinguished from accelerating core business growth. The $104 target price applies a 32x EV/EBITDA multiple based on the estimated enterprise value for 2027.

Todaro noted that while revenue missed expectations, diluted EPS was $0.18, exceeding the estimate of $0.16. He suggested that Arc has the potential to grow into a larger business than USDC, serving as an operating system for on-chain finance. Arc token pre-sales amounted to $242 million. Of this, $180 million is expected to be reflected in revenue in the second half of 2026, with an anticipated profit margin close to 100%. Needham's target price of $127 was calculated based on a discounted 28.5x EV/EBITDA multiple for the estimated enterprise value in 2028.

The annualized payment volume of the Circle Payments Network expanded to approximately $23 billion as of July 31. Participating financial institutions include 175 entities across 58 countries. Both brokerage firms cited the Arc mainnet launch on September 16, with BlackRock (BLK), DTCC, Visa (V), and Mastercard (MA) participating as validators, as the biggest short-term variable. On the regulatory front, they presented the GENIUS stablecoin regulation act, effective January 2027, as a more crucial benchmark than the pending U.S. crypto market structure bill.

[Article Key Summary]

-Circle's target price was lowered to $104 by H.C. Wainwright and $127 by Needham, but the buy recommendation was maintained.

-USDC circulation decreased by 5% from the previous quarter to $73.3 billion, leading to revenue below market expectations.

-Both brokerage firms cited the Arc mainnet launch on September 16 and an annualized payment volume of $23 billion as grounds for a bullish outlook.

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