Circle analysts split as Morgan Stanley cuts target to $38 while TD Cowen sees $82 upside

Wall Street analysts offered sharply contrasting views on Circle Internet Group on Monday, highlighting a growing debate over whether the stablecoin issuer can expand beyond the reserve income generated by USDC.

Morgan Stanley downgraded Circle from Equal Weight to Underweight and cut its price target to $38 from $106. TD Cowen, meanwhile, initiated coverage with a Buy rating and an $82 target.

Morgan Stanley said slowing USDC growth, intensifying competition and delays in developing transaction based revenue could leave Circle’s earnings below market expectations.

The firm reduced its forecasts for USDC circulation by about 33% for 2027 and 44% for 2028. Those revisions pushed its 2028 earnings estimate roughly 20% below Wall Street consensus.

Morgan Stanley argued that stablecoin activity remains heavily concentrated in crypto trading and transfers rather than everyday payments. That concentration could make USDC balances less durable and leave Circle reliant on interest earned from the assets backing the token.

The brokerage also warned that tokenized money market funds, tokenized bank deposits and consortium backed stablecoin projects such as OpenUSD could weaken Circle’s reserve income model.

New opportunities including agentic commerce and digital payments remain too small to materially affect earnings in the near term, according to the firm.

TD Cowen presented a more optimistic view, arguing investors are focusing too heavily on reserve income while overlooking Circle’s development into a broader digital financial infrastructure company.

The firm expects USDC circulation to grow at a compound annual rate of roughly 31% through 2030, supported by greater regulatory clarity and institutional adoption.

TD Cowen also expects fee based revenue from Circle Payments Network, Cross Chain Transfer Protocol, StableFX and Arc to grow considerably faster than reserve income. That expansion could gradually reduce Circle’s sensitivity to interest rates.

Circle has positioned its products as infrastructure for payments, treasury management, tokenized assets, blockchain interoperability and application development.

TD Cowen identified Arc, Circle’s blockchain initiative, as a source of significant long term optionality. The firm said Circle could benefit as regulated stablecoins become more deeply integrated into global financial systems.

However, the brokerage acknowledged that lower interest rates, bank issued stablecoins, OpenUSD, tokenized deposits and slower monetization of Circle’s platform products remain important risks.