Circle Stock (CRCL) Sinks 6% Premarket as Morgan Stanley Says Sell and Slashes Price Target

Shares of USDC stablecoin issuer Circle (CRCL) tumbled in pre-market trading on Monday, August 3, after Wall Street bank Morgan Stanley (MS) downgraded the stock and slashed its price target. The move also coincided with an unexpected Buy rating from TD Cowen even as concerns over Bitcoin’s (BTC-USD) downtrend and the delay in the proposed U.S. crypto law, the Digital Asset Market Clarity Act, persist. 

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Circle Stock Falls 6% as Morgan Stanley Warns Sell

Circle stock fell to $58.67 in pre-market trading after its price declined by 6.25% on Monday. The latest drop appears to be an extension of the downtrend from last week, with CRCL falling over 8% on Friday and another 2.5% at the close of the market.   

Notably, Circle’s stock drop aligns with new ratings from James Faucette, an analyst at Morgan Stanley analyst. Faucette has downgraded Circle stock from ‘equal weight’ to ‘underweight.’ The decision also comes as Circle and some other crypto stocks continue to experience losses following BTC’s price decline and broader market volatility. 

Faucette has also given CRCL a Sell rating and slashed its price target from $106 to $38, highlighting a severe decline in sentiment. The analyst predicts that Circle could decline as much as 39.31%, reflecting a similar negative rating from Dan Dolev from Mizuho Securities, who projected a 28.13% downside for CRCL on July 31. 

Notably, Faucette shared reasons for his downgrade, pointing to competition and reduced transaction revenue. 

“We downgrade Circle as USDC contraction exposes reserve income sensitivity and points to a lower-margin shift toward transaction revenue,” the analyst said.

He also mentioned fresh challenges from Open USD (OUSD), a new stablecoin competitor of Circle’s USDC, which is backed by leading fintech and crypto firms such as BlackRock (BLK), Visa (V), Mastercard (MA), and Coinbase (COIN). 

TD Cowen Sees Long Term Opportunity in Circle

While some market experts have downgraded Circle stock, TD Cowen analyst Bryan Bergin has initiated coverage with a Buy rating and an $82 price target. Bergin forecasted an upside of about 30.97% on August 3, the same day Morgan Stanley downgraded CRCL.

Bergin said Circle is evolving beyond a basic reserve-income model into a broader global financial system. He also said the stock offered a “compelling combination” of growth and high-margin, fee-based revenue. 

Is Circle a Good Buy Right Now?

Wall Street analysts tracked by TipRanks have rated Circle (CRCL) a Moderate Buy. Out of 28 analysts, 15 rate it a Buy, 11 a Hold, and 2 a Sell. The stock has also been projected to reach a 3-month average price target of $333.37, implying a 0.02% downside. (See CRCL stock forecast)