Key Takeaways
- Circle Internet Group has lost 39% over the past year. On Nov. 5, Needham cut its price target to $103 from $134 and kept its Buy rating.
- Falling interest rates cut Circle’s third-quarter reserve income by 8%, and USDC in circulation was flat from a year earlier at $73.9 billion.
- Needham’s target works out to about 79x forward earnings, above Circle’s one-year average of 73x, and analysts have cut their 2027 and 2028 earnings estimates in recent months.
- $103 within a year looks out of reach until USDC in circulation starts growing again.
Circle Internet Group (CRCL) has lost 39% over the past year. On Thursday, the morning after its third-quarter report, Needham cut its price target to $103 from $134 but kept its Buy rating. Shares fell 8.72% that day to $69.48 as bitcoin and crypto stocks slid in a broad tech selloff and several firms cut their targets. That leaves Needham’s $103 48% above the close.
Lower rates, and no growth in USDC
Reserve income, the interest on the reserves behind USDC, made up 95.2% of Circle’s revenue in the second quarter, so its earnings move with interest rates. In the third quarter, the rate Circle earned on its reserves was 3.5%, down 0.61 points from a year earlier.
Average USDC in circulation grew 8% in the quarter, but USDC ended September at $73.9 billion, flat from a year earlier.
Wednesday’s results showed the squeeze. Reserve income fell 8% to $658 million. Total revenue and reserve income rose 17% to $865 million, but $182 million of that came from the presale of Arc’s network token. And on the call, CFO Jeremy Fox-Geen said to expect a margin “step down” in the fourth quarter, the first full quarter of Circle’s renewed Binance incentive arrangement.
Needham still rates it a Buy
Needham’s John Todaro saw 48% upside in October, with a $134 target. According to Benzinga, he cut it on slower USDC supply growth but still expects Arc to start diversifying Circle’s revenue from 2028. His new $103 sits just below the Street’s $107 average as of Nov. 2, before the round of cuts that followed the report.
TIKR tracks 29 analysts on Circle Internet Group. How many say “Buy”?
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Does $103 add up?
The Street has been marking Circle down for a year. The average target was $167 a year ago and $107 on Nov. 2, 49% above that day’s $72.08 close.
Analysts have cut their earnings estimates too. At the end of June, they expected normalized EPS of $2.22 for 2027. Now it’s $1.48, and even the $1.91 they expect for 2028 is below the $2.35 Circle earned in 2025.
The 2027 estimate has barely moved since the end of September, but the 2028 estimate has dropped from $2.34.
At the Nov. 2 close, Circle traded at 56x forward earnings, below its one-year average of 73x.
Needham’s $103 works out to about 79x the $1.30 a share analysts expect over the next 12 months. That’s above the one-year average, and the 128x the stock traded at a year ago pulls that average up.
Wait for USDC to grow again
The risk in waiting is the fee side of the business. Fox-Geen said Circle expects “material revenue” from its payments network in 2027, once its Tazapay deal closes.
But Circle’s earnings still rise and fall with rates, and USDC in circulation hasn’t grown in a year. Until it does, 79x is a lot to pay for those earnings, so $103 within a year looks out of reach.
Fourth-quarter results, likely in late February, should show whether USDC is growing again.
So what is Circle Internet Group stock actually worth?
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