Compass Point downgrades Circle’s rating to “Sell,” and cuts its price target to $77

Gate News message, April 10, Compass Point analyst in a report dated April 11 downgraded Circle’s rating from “Neutral” to “Sell,” and lowered its target price from $79 to $77. The report said that although the supply of Circle’s flagship dollar-pegged token USDC has remained stable in recent months, the growth has mainly come from lower-margin areas.

The analysis said that since early February, nearly 80% of the growth in USDC supply has come from platforms such as Sky, a certain CEX, and Ethena. These platforms have distribution agreements with Circle, but they also divert a portion of USDC reserve interest income, thereby squeezing the company’s earnings. By comparison, Circle’s “off-chain” USDC holdings not circulating on these platforms have higher margins. This means investors may face unfavorable results in the Q1 earnings report released at the end of May or early June. Analyst Ed Engel said, “CRCL’s first-quarter results may fall short of expectations that the market is gradually raising.” Compass Point expects Circle’s first-quarter EBITDA to decline 19% quarter over quarter, and lowered its full-year 2027 EBITDA forecast to about 20% below the market’s consensus.

However, if the overall crypto market rises, Circle’s outlook could improve. Although USDC is pegged to the dollar, increased on-chain activity will drive higher stablecoin circulation, thereby boosting the usage scale of higher-margin platforms. Right now, Wall Street overall is still somewhat optimistic about Circle. Among 27 analysts surveyed by FactSet, 48% rate it a “Buy,” 44% rate it a “Hold,” and the average target price is $131.29.