JP Morgan analysts initiated coverage of Circle with an “Underweight” rating on Monday, arguing that the stablecoin issuer’s stock has become overvalued since its blockbuster initial public offering ignited fervor for stablecoins on Wall Street.

“We think highly of the Circle management team and are confident in the outlook for outsized stablecoin and USDC growth,” the analysts wrote in a note. “However, we see Circle’s current market capitalization elevated.”

JP Morgan analysts penciled in a price target of $80 per share for year-end 2026, valuing the company on a price-to-earnings ratio of 45x, which they say is in line with peers like Robinhood. The price target also reflects a $10 premium, capturing “current investor enthusiasm for the stablecoin and USDC outlook,” they added.



Circle shares were trading at about $186.50 on Monday, up more than 3%. The stock fell 25% last week, according to Yahoo Finance. Shares have soared as high as $299 since the company’s NYSE debut. 

Companies like Circle earn most of their revenue from assets backing dollar-pegged tokens like cash and U.S. Treasuries. Circle’s “business model is highly sensitive to interest rates,” JP Morgan analysts wrote, with over 95% of revenues tied to reserves.

Although lower interest rates would weigh on Circle’s profitability, JP Morgan analysts noted that the company could outperform if interest rates stay higher for longer.

With stablecoin legislation inching toward law on Capitol Hill, Circle may face stiff competition from “major banks and consumer retailers” introducing their own stablecoins, the analysts wrote. However, Circle’s stablecoin and network for issuing USDC have interoperability features that competitors may struggle to develop, they added.

Unlike tokenized money-market funds, Circle’s USDC does not offer investors a yield. If tokenized money-market funds, or tMMFs, start taking market share away from stablecoins, that could limit USDC’s future growth, the analysts wrote.

Stablecoin legislation could help USDC take market share from Tether’s USDT, the industry’s leading stablecoin, the analysts wrote, by forcing Tether to adapt its token to comply with new rules.  USDC has a more “compliant and trusted brand” that’ll attract more conservative Wall Street firms, they wrote.

However, if the legislation that’s signed into law has higher capital requirements, requiring Circle to hold more capital on hand for USDC redemptions, that could also “restrict USDC growth,” the analysts added.

U.S. President Donald Trump isn’t a fan of central bank digital currency, or CBDC, signing an executive order that outlawed a digital version of the dollar earlier this year. But if regions like the EU eventually adopt a CBDC, that could negatively affect USDC’s ability to scale globally, the analysts wrote.

Still, the analysts believe the company could outperform in the long run if stablecoin adoption in the U.S. happens quicker than expected or stablecoins’ use in cross-border and consumer payments surge. The JP Morgan analysts noted that the bank is debuting its own tokenized deposit accounts.

“Stablecoin regulation is progressing in the US.,” they wrote. ““The passage of stablecoin regulation could be a greater catalyst for stablecoin adoption in the U.S. and abroad, and we see USDC as a winner.”

Edited by James Rubin

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