Circle is due to report quarterly earnings before the U.S. market opens on Aug. 5, with Wall Street divided over whether the company’s valuation should rest primarily on USDC’s growth or on its effort to build payments, tokenization and blockchain-services businesses around the stablecoin.
Morgan Stanley downgraded Circle to Underweight from Equal Weight on Aug. 3 and cut its price target to $38 from $106. TD Cowen, meanwhile, initiated coverage with a Buy rating and an $82 target. Mizuho analyst Dan Dolev also maintained a Hold rating while reducing his target to $45 from $50.
The unusually wide range reflects a basic question for the newly public stablecoin company: whether USDC supply can resume expanding quickly enough to sustain the reserve-income business that has generated much of Circle’s revenue, or whether newer fee-based services can become a meaningful source of earnings.
Circle’s results will be closely examined for reserve income, USDC circulation trends, operating expenses and signs of commercial traction in payments and tokenized assets. Guidance on those areas could determine whether the market treats the company more like a yield-sensitive stablecoin issuer or a developing financial-infrastructure provider.
Morgan Stanley focuses on stagnant USDC supply
Morgan Stanley analyst James Faucette’s downgrade centered on Circle’s dependence on interest income from the cash and short-term U.S. Treasury securities backing USDC. Those reserves generate revenue while USDC remains in circulation, making supply growth a central input into the company’s earnings outlook.
Faucette wrote that USDC supply had not expanded since the third quarter of 2025. A prolonged plateau would limit the growth of reserve assets and, by extension, the interest income Circle receives from them.
That issue becomes more acute if Circle’s revenue mix shifts toward payment and transaction services. Such services can create recurring commercial relationships and diversify the business beyond reserve yields, but Morgan Stanley’s note argued that transaction-based revenue generally carries lower margins than income generated from reserve assets.
The $38 target represents a substantial reset from Morgan Stanley’s previous $106 estimate. It indicates that the bank sees less room for Circle’s valuation to be supported by expectations of rapid USDC expansion, particularly if stablecoin demand remains flat or shifts toward competitors.
Mizuho’s reduced $45 target points to similar caution, though its Hold rating suggests a less negative view than Morgan Stanley’s Underweight call. Neither bank’s position depends solely on the size of the stablecoin market. Both place considerable weight on the pace at which Circle can convert its existing products and network into higher-volume commercial use.
TD Cowen values a broader infrastructure business
TD Cowen analyst Bryan C. Bergin took the opposite approach, arguing that Circle’s long-term opportunity extends beyond issuing USDC and collecting revenue from its reserves.
Bergin’s coverage note pointed to payments, cash-management services, tokenized real-world assets, developer tools and blockchain infrastructure as potential growth areas. In that view, USDC serves as the settlement layer and distribution channel for a larger suite of financial products rather than the company’s sole economic engine.
TD Cowen projected that USDC circulating supply could grow at a compound annual rate of about 31% through 2030. The firm also expects fee-based revenue to expand faster than reserve income over that period.
That forecast assumes Circle can build more activity around USDC rather than relying mainly on passive balances. Payment flows, treasury management and tokenized securities could generate fees each time businesses use Circle’s tools or move value across its network. The commercial appeal of that model depends on whether customers adopt Circle’s products at scale and whether the fees can offset the lower margins associated with transaction revenue.
Bergin also cited Circle’s Arc network as a possible source of future activity. The network forms part of Circle’s attempt to provide infrastructure tailored to digital financial applications, where stablecoin settlement, programmable payments and tokenized assets can operate in a connected environment.
The optimistic case therefore requires more than a rising USDC supply. It assumes Circle can establish a durable role in the services built around stablecoin use, including areas where banks, payments companies, blockchain networks and other financial-technology firms are also competing for market share.
Earnings will test competing assumptions
Circle’s report arrives as policy timelines remain a near-term source of uncertainty for stablecoin businesses. Market attention has turned to the CLARITY Act, whose progress has faced delays as the Senate approaches its summer recess with limited working days remaining.
Delays do not necessarily alter existing demand for USDC, but they can affect expectations for when companies will receive clearer federal rules around digital assets and related financial services. Businesses considering stablecoin-based payment, treasury or tokenization projects may be more willing to commit resources when the regulatory framework is clearer.
For Circle, the immediate earnings questions are more concrete. Traders will look for changes in USDC circulation, the composition of reserve income, expenses associated with new product development and evidence that payments or tokenization services are producing material revenue.
A rise in USDC supply would support the reserve-income case emphasized by Morgan Stanley, while strong growth in service revenue could lend weight to TD Cowen’s infrastructure thesis. Weakness in both categories would make the debate less about future optionality and more about the cost of building new businesses before they contribute meaningfully to profits.
The divergent targets of $38, $45 and $82 leave Circle’s earnings release positioned as a test of competing assumptions about how stablecoin issuers mature. The company’s ability to show either renewed USDC growth or measurable fee-based momentum could reshape the valuation debate that has opened ahead of the report.
For deeper context on stablecoins and regulation, explore our take on the turning point for stablecoins today.
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