Morgan Stanley Downgrades Circle, Cuts Price Target to $38 

Morgan Stanley turned bearish on Circle, lowering its recommendation to “Underweight” from “Equal-weight” and reducing its price target to $38, down from $106, after reassessing the stablecoin issuer’s long-term earnings trajectory.

In its research note, the bank said future growth in USDC is likely to slow as revenue derived from reserves comes under greater strain. It also expects transaction-related income to account for a larger share of revenue despite carrying lower margins.

The analysts identified tokenized money market funds, tokenized deposits, and Open USD as emerging competitive alternatives that could weaken Circle’s unit economics over time.

Circle shares traded about 6% lower after the rating change.

Source: CoinDesk