Shares of Circle Internet Group fell sharply in premarket trading on Monday after Morgan Stanley downgraded the stablecoin issuer, while TD Cowen initiated coverage with a bullish rating, highlighting a growing divide on Wall Street over the company’s long-term prospects.
Circle stock declined 6% to $58.81 in premarket trading following the contrasting analyst calls.
Meanwhile, Bitcoin traded 0.64% lower over the past 24 hours at $62,625.
Morgan Stanley cut its rating on Circle to Underweight from Equal Weight and slashed its price target to $38 from $106, while TD Cowen began coverage with a Buy rating and an $82 price target, implying significant upside from current levels.
Morgan Stanley sees weaker USDC growth
Morgan Stanley’s downgrade was driven by expectations that the circulation of USDC, Circle’s dollar-pegged stablecoin, will grow more slowly than previously anticipated.
The brokerage reduced its forecasts for USDC circulation in 2027 and 2028 by 33% and 44%, respectively, challenging Circle’s target of achieving average annual growth of 40% across market cycles.
“USDC has effectively not grown” since the third quarter of last year, analysts noted.
The brokerage added that broader adoption has yet to materialize as “utility beyond remittances and stablecoin-linked card spending has yet to gain meaningful traction.”
Morgan Stanley argued that while payment companies including Mastercard and Stripe have increasingly embraced stablecoin technology, practical adoption remains limited.
Citing McKinsey data, the brokerage said stablecoin transaction volume reached about $35 trillion in 2025, but only around $390 billion represented identifiable real-world payments.
Analysts added that payment activity remains concentrated in cross-border business transactions, remittances and stablecoin-linked card spending.
“Stablecoin activity remains overwhelmingly skewed toward crypto trading and transfer activity rather than payments. McKinsey estimates roughly $35 trillion of adjusted volume, of which only $390 billion represents identifiable payments (which will still think may be optimistic), or roughly 0.5% of unadjusted activity and about 1% of adjusted activity,” Morgan Stanley analyst James Faucette wrote.
He added, “While there are real and growing use cases in cross-border B2B and consumer remittances (including stablecoin-linked card spending) that are driving transaction velocity, they have not yet demonstrated the ability to create the durable balances or recurring transaction economics needed to offset pressure on Circle’s reserve-income model.”
TD Cowen sees long-term platform opportunity
TD Cowen took a more optimistic view, launching coverage with a Buy rating and an $82 price target.
The brokerage said, “We see a compelling combination of attractive growth + diversification via USDC circulation, rapidly growing high-margin fee-based revenues & Arc optionality and think the Street underestimates the evolution into a platform player.”
Analyst Bryan Bergin believes Circle’s business is expanding beyond stablecoin issuance into a broader financial infrastructure platform that covers payments, treasury services, tokenized real-world assets, interoperability, and developer services.
Bergin also described Circle as “an attractive vehicle for investors seeking exposure to the institutionalization of stablecoins and the modernization of global financial infrastructure.”
Analysts remain divided on Circle
Circle shares have struggled throughout 2026, falling 21% year to date compared with a 9.4% gain for the broader market. Bitcoin has declined 28% over the same period.
The stock has also faced pressure from uncertainty surrounding the proposed Clarity Act, legislation intended to establish a regulatory framework for the cryptocurrency industry.
Analyst opinion remains closely split.
According to LSEG data, 16 of the 30 analysts covering Circle rate the stock Hold or Sell, while the remaining 14 recommend Buy or Strong Buy.
The contrasting views underscore differing expectations for the pace of stablecoin adoption, the future growth of USDC and Circle’s ability to evolve into a broader financial infrastructure platform as the regulatory landscape continues to develop.
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