Mizuho Downgrades Circle to Underperform, Sets Street-Low $50 Target on OpenUSD Threat

Mizuho Securities set a $50 price target on dollar stablecoin issuer Circle, marking one of the lowest targets on Wall Street.

Bloomberg reported on July 17 that Mizuho Securities USA analyst Dan Dolev downgraded Circle to underperform from neutral and set a $50 price target. That is the lowest target on Wall Street.

The $50 target implies about 18% downside from Circle’s July 16 closing price. It is also well below the $123 average analyst price target compiled by Bloomberg.

Mizuho said the market is underestimating intensifying competition in the stablecoin industry. In particular, it said OpenUSD, or OUSD, with participation from Visa, BlackRock, Stripe and Coinbase, could emerge as a formidable rival to Circle.

“OpenUSD has top-tier partners, substantial assets under management and a large customer base, so it will make every effort to expand adoption of its stablecoin,” Mizuho said. “That risk is still not fully reflected in the market, making existing earnings forecasts overly optimistic.”

Mizuho projected Circle’s adjusted EBITDA for next year at $699 million. That is well below the market consensus of $907 million. The firm said Circle is in a difficult position.

Mizuho also cited the renegotiation of Circle’s distribution agreement with Coinbase, scheduled for August, as a near-term risk. With Circle under pressure from the emergence of OUSD, Coinbase could use that in talks to secure a more favorable economic split. Mizuho said that could hurt Circle’s profitability and led it to lower its earnings forecasts.