Original Title: "Heaven or Hell? Bernstein is Bullish on Circle's Stock Price Rising Another 30%, While JPMorgan is Bearish and Predicts a Halving of the Stock Price"
Original Author: Editor Jr., BlockTempo
The issuer of the US dollar stablecoin USDC, Circle, officially went public earlier this month, with the stock symbol CRCL on the US market. According to Google Finance data, as of the evening of June 30 Taiwan time, CRCL was reported at $180, nearly 6 times its IPO price of $31, with a market capitalization of $40.2 billion. At one point, it even surged past $260, attracting significant attention from the financial markets.
Bernstein Rates CRCL as Buy: Target Price $230
In light of CRCL's astonishing rise, The Block reported that Wall Street's top investment bank, Bernstein, has also begun tracking Circle for the first time, giving it an "outperform" rating and setting a target price of $230. The core reasons for this judgment provided by Bernstein include:
- Growth Expectations for the Stablecoin Market: Bernstein estimates that the total market value of stablecoins could grow from $244 billion to $4 trillion over the next decade, with USDC's market share in the stablecoin market increasing from the current 25% to 30%. Although it will still lag behind its competitor Tether's USDT, this is enough to drive its stock price up;
- Regulatory Policy Advantages: If the US stablecoin bill, the GENIUS Act, is passed, USDC will gain the advantage of "first-mover regulatory approval";
- Financial Growth Model: Bernstein's ten-year discounted cash flow model predicts a compound annual growth rate (CAGR) of 47% for Circle's revenue from 2024 to 2027, and a CAGR of 71% for EBITDA, thus advising investors to buy on dips.
Note: EBITDA stands for "Earnings Before Interest, Taxes, Depreciation, and Amortization." It is a financial metric used to measure a company's operating performance and profitability, reflecting the core operating profit before deducting interest, taxes, depreciation, and amortization.
JPMorgan Throws Cold Water: Overvalued, Target Price Only $80
However, on the same day, JPMorgan pointed out in a report that the bank also began coverage of Circle for the first time but gave it a "reduce" rating, setting Circle's target price at $80 by the end of 2026, with the following reasons:
- Overvaluation: Based on a 45 times price-to-earnings (P/E) ratio for the expected earnings per share (EPS) in 2027, plus an additional $10 upside potential premium, JPMorgan believes Circle is currently overvalued;
- Competitive Pressure: Competitors such as USDT, tokenized deposits, and digital currency funds may divide liquidity, putting pressure on USDC's growth prospects;
- Policy and Market Risks: If the US imposes higher capital requirements on stablecoin issuers in the future, or if central bank digital currencies (CBDCs) become widespread, it will also compress Circle's profits.
The Valuation Gap Behind $230 vs $80
The divergence between Bernstein and JPMorgan centers on three key assumptions:
· Total Addressable Market: Bernstein sees $4 trillion, while JPMorgan adopts a more conservative estimate.
· Potential Risks: Bernstein assumes high growth can be sustained long-term, while JPMorgan incorporates regulatory and competitive risks into its discounting.
· Model Choice: The former uses discounted cash flow to measure high beta stocks, while the latter uses target P/E ratios plus brand premiums as the basis for judgment.
Both Bernstein and JPMorgan's analyses are well-founded. If USDC can maintain its market share and obtain a clear regulatory framework, the bullish scenario may have a chance to materialize; conversely, if competitors accelerate their rise or policies shift, JPMorgan's $80 warning should not be overlooked. The future performance of CRCL will validate which side's prediction holds true, warranting continued attention.
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