Analyst Claims Stablecoin Issuers Like Circle (CRCL) Will Transition From Crypto Market Money-Rails to Internet Money-Rails

Analyst Claims Stablecoin Issuers Like Circle (CRCL) Will Transition From Crypto Market Money-Rails to Internet Money-Rails

This is not investment advice. The author holds no positions in any of the stocks mentioned.

Circle Internet Group: Positioned for Growth

Circle Internet Group (NYSE: CRCL), recognized as the world’s second-largest issuer of USD stablecoins, is anticipated to experience significant growth in the forthcoming years. This viewpoint has gained traction among Wall Street analysts, although it is tempered by the already high valuations of the recently public stock.

For those unfamiliar, Circle ensures each minted USDC token is backed by yield-bearing U. S.Treasuries. The majority of Circle’s revenue is derived from the interest earned on these reserves, which predominantly consist of U. S.Treasury securities.

Notably, Circle has a revenue-sharing arrangement with Coinbase, its strategic partner, which played a crucial role in launching the USDC stablecoin.

Analyst Perspectives on Circle Stock

A recent analysis from Gautam Chhugani, an analyst at Bernstein SocGen Group, has initiated coverage of Circle stock with an ‘Outperform’ rating and a price target set at $230 per share. Chhugani highlights Circle’s ambitions, stating:

“CRCL is building a market-leading digital dollar stablecoin network, with a strong regulatory edge, liquidity headstart and marquee distribution partnerships.”

Chhugani views Circle as a “must-hold”investment, predicting a transition in the role of stablecoins from merely serving as a monetary rail within crypto markets to becoming integral to the broader internet economy.

The analyst projects that the total addressable market (TAM) for stablecoins could soar to an astounding $4 trillion over the next decade, compared to the current figure of approximately $225 billion.

In a similar vein, Oppenheimer analyst Owen Lau has offered a ‘Perform’ rating on Circle shares. Highlighting that USDC holds a 24% share of the global market, Lau positions the stock as a means of getting “clean”exposure to disruptions occurring within blockchain technology across various sectors, including money market funds and consumer payments.

Conversely, Goldman Sachs analyst James Yaro adopts a more cautious stance, assigning a ‘Neutral’ rating and setting a stock price target of $83. This conservative outlook stems from concerns about the significant rise of Circle’s stock price following its IPO. Currently, Circle shares are trading around $185.

Yaro anticipates a robust supply growth for USDC, forecasting a compound annual growth rate (CAGR) of 40% from 2024 to 2027, which should result in a CAGR of 26% for Circle’s revenue over the same period.

For further insights, visit the source to explore the evolving landscape of stablecoin issuance and its implications on financial markets.

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