'Sahak Ants' Favorite Stock, Circle: Wall Street Analysts Split Between '$250' and '$80'

Domestic investors have bought the most Circle Internet Group (Circle) shares among all foreign stocks over the past month, and Wall Street analysts have highly divergent outlooks. Some believe the company's value could grow significantly if the stablecoin market expands, while others warn that the stock price is already too high.

According to the Korea Securities Depository on the 4th, since Circle was listed on the New York Stock Exchange on the 5th of last month, it has ranked first among foreign stocks in net purchases by domestic individual investors up to the previous day. During this period, 'Sahak Ants' (Korean individual investors trading foreign stocks) net purchased Circle shares worth $672,568,353 (approximately ₩917.8 billion).

This outpaces net purchases of the runner-up, Direxion Daily TSLA Bull 2X Shares (an ETF tracking double Tesla's daily return), by about ₩83 billion, and is more than four times the net purchases of the third place, Palantir Technologies. As of the previous day, Korean investors held 1.6% of Circle's market capitalization (₩57 trillion).

Circle is the company that issues USDC, the world's second-largest dollar stablecoin by market capitalization. As Tether, the issuer of the world's largest stablecoin USDT, is unlisted, some analysts say that investment demand is being concentrated on Circle.

Circle's share price surged from its IPO on the 5th of last month to the 23rd. The IPO price was $31, but it soared to $298.88 during trading on the 23rd. When the U.S. Senate passed the 'GENIUS Act,' which brings stablecoin companies under regulatory oversight, investor expectations for market expansion fueled the surge. However, following concerns about stablecoins raised by the Bank for International Settlements (BIS) and others, the stock price dropped to the $180 range. It closed at $188.77 the previous day, up 6.07%.

Circle's price-to-earnings ratio (PER) as of the previous day is approximately 651 times, based on FactSet's TTM EPS consensus (last 12 months’ net income per share). This far exceeds the S&P 500's 12-month forward PER of about 22 times.

Wall Street experts are divided on the future direction of Circle's stock price. Ten investment banks (IBs) have released target prices for Circle since late last month, ranging from a high of $250 to a low of $80. The average price target among the 9 firms that provided 12-month estimates is $188.88, nearly the same as the latest closing price.

Needham & Company, which set a target of $250, rated the stock as a 'Strong Buy,' stating, "Stablecoins are growing rapidly and will change the financial ecosystem paradigm." John Todaro, an analyst at Needham, argued that Circle deserves a premium value on par with Tesla and major AI firms. Canadian securities firm Canaccord Genuity also issued a 'Strong Buy' recommendation with a $247 target price.

By contrast, Deutsche Bank set a target price of $155 with a 'Hold' rating. Brian Bedell, an analyst at Deutsche Bank, commented, "While stablecoins have long-term potential, in the medium term, the company’s earnings outlook could introduce significant volatility for the stock. It’s better to wait for a better entry point than to jump in now."

Oppenheimer's analyst Owen Lau did not provide a specific target price, noting that "investing in Circle is a 'clean' way to increase exposure to the crypto market," but also that "since the share price has surged just four weeks after listing, it’s preferable to wait for a better entry opportunity." Potential buy opportunities may arise, depending on the trend of stablecoin regulation.

Some IBs have raised 'warning flags.' Goldman Sachs valued Circle at a fair price of $83 with a 'Hold' rating, suggesting the price could drop by up to 83% from its current level. James Yaro, an analyst at Goldman Sachs, said, "Circle is trading at roughly 60 times its adjusted earnings for the next 5–8 quarters," and predicted "a significant price adjustment may be needed."

The lowest target was set by JPMorgan, which put Circle's fair value at $80 and issued a 'Sell' recommendation. Kenneth Worthington, an analyst at JPMorgan, remarked, "While Circle has a favorable position in the early stablecoin market, the current market capitalization is excessively high."

Reporter Han Han-gyeol always@hankyung.com