Bernstein Keeps $140 Target on Circle, Says Market Undervalues Growth
Summary
- Bernstein said it maintained its $140 price target on Circle and its Outperform rating.
- Circle reported $701 million in second-quarter revenue, adjusted EBITDA of $143 million, and EPS of $0.19. Reserve income accounted for about 95% of total revenue.
- Bernstein said Circle’s long-term growth prospects, distribution network, partnerships, transaction fees and potential revenue from its proprietary blockchain Arc are being underestimated despite rising stablecoin competition and shifting interest-rate conditions.
Forecast Trend Report by Period
Bernstein maintained its $140 price target on Circle, the issuer of the dollar stablecoin USDC.
The firm said in a recent report that Circle’s second-quarter results make the bearish case harder to sustain, according to The Block on August 6. Bernstein also reiterated its Outperform rating.
Circle reported second-quarter revenue of $701 million, up 7% from a year earlier. That was about 2% below market expectations.
Adjusted EBITDA was $143 million, and basic earnings per share came in at $0.19. Both topped forecasts. Reserve income accounted for about 95% of total revenue.
Bernstein said Circle’s stock has come under pressure from intensifying competition in the stablecoin market and concerns about the sustainability of reserve income as interest-rate conditions shift. Still, the firm said investors are underestimating Circle’s long-term growth prospects and the strength of its distribution network.
It also said Circle’s partnerships, transaction fees and potential new revenue from its proprietary blockchain Arc are not yet fully reflected in the company’s valuation. In particular, Bernstein said potential revenue from Arc gas fees and staking is not included in the market’s earnings estimates.
JOON HYOUNG LEE
gilson@bloomingbit.ioCrypto Journalist based in Seoul