MW Is Circle Internet's stock too pricey after a 700% rally since its IPO? This analyst thinks so.

By Steve Gelsi

Compass Point analyst Ed Engel set his price target for Circle's stock at $205, which is nearly 20% below current levels

Circle Internet Group Inc.'s stock has been on fire over the past few weeks, enough to inflate the price by nearly 20% above fair value, an analyst said Tuesday.

The stock $(CRCL)$ pulled back 5.2% in midday trading Tuesday, after soaring 76.6% over the past three sessions. If the loss holds, it would only be the fourth decline since the stablecoin issuer went public on June 5.

Circle's stock was trading 706% above the initial public offering price of $31, as recent endorsements of stablecoins from Congress and financial-technology companies have sparked a buying frenzy.

Read: Circle Internet's stock surge continues, as new Senate bill indicates the government is taking stablecoins seriously.

Still, Compass Point analyst Ed Engel believes the stock has gone too far, and assigned it a neutral rating.

"We believe [Circle's] valuation already reflects optimistic longer-term assumptions which makes it hard to justify a higher valuation," Engel said.

His price target of $205 is 18% below current prices. It's also $30 below the $235 price target for Circle Internet issued earlier this week by Seaport Global Securities.

Also read: Why stablecoin play Circle's stock is still a buy even after a sixfold rally

Other analysts have yet to weigh in on the stock because its IPO was less than a month ago.

On the plus side, Circle Internet's U.S.-dollar-denominated stablecoin, USDC, may take some business away from traditional payments systems as blockchains draw more transactions, Compass Point's Engel said.

"CRCL provides pure-play exposure to this disruptive technology as the largest issuer of regulated stablecoins," Engel wrote.

But Circle Internet also needs more distribution of USDC outside of the existing world of cryptocurrencies, because "mainstream businesses have much broader connectivity to end users," Engel said.

Investors appear to be downplaying Circle Internet's fundamentals based on its near-term earnings prospects, as well as the threat of new entrants and declining gross margins, he noted.

Engel said that after the U.S. Senate last week passed its version of the Genius Act to set up a regulatory system for stablecoins, he's expecting a House-approved version of the bill over the summer and President Trump's signature by August.

This will accelerate mainstream adoption of blockchain payments in the vein of Shopify (SHOP), which automatically converts USDC into local currencies with no foreign-transaction or exchange fees.

"These integrations can reduce merchant discount rates by 100-200 basis points [1 to 2 percentage points] relative to debit and credit-card payments," Engel said.

Circle Internet has developed "complex blockchain software that's difficult to replicate," he added.

In a fresh move this week, Circle Internet will team up with Fiserv Inc.'s $(FI)$ plan to offer its own stablecoin, FIUSD, to be used by banks.

See: Fiserv's stock surges as it teams with Circle to join the stablecoin party

Also read: Mastercard makes a move toward stablecoins, in an effort to boost mainstream use

-Steve Gelsi

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June 24, 2025 12:57 ET (16:57 GMT)

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