Analysts at JPMorgan Chase, a major American investment bank, have initiated coverage of Circle (CRCL) stock with an "underweight" rating, projecting a target price of $80 by December 2026.
Led by Kenneth Worthington, the JPMorgan analyst team officially released their analysis of Circle stock in a report on North American equities on Monday, which was obtained by Cointelegraph.
The forecast is based on a price-to-earnings (P/E) ratio of 45 times the estimated earnings per share (EPS) for 2027, plus a $10 upside potential premium, representing a 55% decline from the current CRCL price of $180.
"Our target price has a significant premium compared to the IPO price of $31, but it also shows a clear discount relative to the current stock price of $180," the analysts stated.
While they believe Circle is well-positioned in the emerging stablecoin market due to its first-mover advantage and numerous application scenarios, JPMorgan analysts noted that its current market valuation is high.
According to CompaniesMarketCap, Circle is valued at $43.8 billion, having seen significant growth since CRCL stock was listed on the New York Stock Exchange (NYSE) with an $8 billion market cap on June 5.
"Our target price of $80 by December 2026 implies a market cap of about $21 billion. Notably, the midpoint of the IPO was set at $31, corresponding to an $8 billion market cap," the analysts wrote.
To explain the "underweight" rating for Circle, JPMorgan analysts mentioned several developments in the coming months that could impact the company's market valuation, including the effects of market competition.
"We believe competition poses a potential threat to Circle," the analysts stated, referring not only to direct stablecoin competitors but also to other crypto investment products such as tokenized deposit accounts and digital currency market funds.
"The risk is that if some competitors can capture enough market share, they could achieve critical scale in low-switching-cost businesses, leveraging the network effects established by Circle," the analysts added.
In addition to other risks, JPMorgan mentioned that U.S. stablecoin regulations may soon require issuers like Circle to hold equity capital based on the amount of stablecoins in circulation, similar to the European crypto asset market (MiCA) regulations.
Although JPMorgan estimates that Circle has sufficient equity to support its USDC (USDC) stablecoin holdings in the U.S., the analysts noted that higher capital requirements could limit USDC's growth.
Furthermore, the analysts highlighted some risks stemming from the development of central bank digital currencies (CBDCs). Despite the U.S. adopting favorable policies for stablecoins to support the strength of the dollar, JPMorgan's report indicated that other countries may still exert pressure on Circle's global expansion.
"Further global adoption of CBDCs, especially in Europe, could impact Circle's ability to expand globally, thereby adversely affecting its long-term growth and profitability," the analysts wrote.
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Original article: “JPMorgan gives Circle an ‘underweight’ rating, target price of $80 by late 2026”
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