Bernstein Keeps $140 Target on Circle, Says Market Undervalues Growth
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Bernstein maintained its $140 price target on Circle, the issuer of the USDC dollar stablecoin.
The firm said in a recent report, cited by The Block on Aug. 6, that Circle’s second-quarter results challenge the bearish case. Bernstein also reiterated its Outperform rating.
Circle reported second-quarter revenue of $701 million, up 7% from a year earlier. The figure was about 2% below market expectations.
Adjusted EBITDA was $143 million, and basic earnings per share came in at 19 cents. Both beat forecasts. Reserve income accounted for about 95% of total revenue.
Bernstein said the main factors weighing on Circle’s stock have been rising competition in the stablecoin market and concerns about the sustainability of reserve income in a changing interest-rate environment. Even so, the firm said investors are underestimating Circle’s long-term growth prospects and competitive advantages, including its distribution network.
Bernstein also said Circle’s partnerships, transaction fees and potential new revenue from its proprietary blockchain, Arc, are not fully reflected in the company’s current valuation. Potential revenue from Arc’s gas fees and staking is not included in market earnings estimates, the firm added.
