Key facts
- Bernstein maintained an Outperform rating and $140 price target on Circle.
- The firm believes Circle's growth is independent of the CLARITY Act.
- USDC supply has seen renewed growth, increasing by $1.7 billion in the past week.
- Circle reported $701 million in second-quarter revenue and $48 million in net income.
- Potential growth drivers include stablecoin payments, tokenization, and blockchain-based capital markets.
Bernstein has reiterated its Outperform rating and set a $140 price target for Circle, asserting that the stablecoin issuer's growth will not be contingent on the passage of the CLARITY Act. The firm's bullish stance is supported by the recent resurgence in USDC supply, which has seen an increase of approximately $1.7 billion in the past week after a period of stagnation.
Circle's stock was trading up 1.39% at $89.20, reflecting a market capitalization of about $22.64 billion. The company recently experienced a significant gain of over 5% in a single trading session, even amidst a broader market downturn. The USDC token itself saw a 0.66% increase over the preceding 24 hours.
Bernstein analysts, led by Gautam Chhugani, highlighted the stablecoin's continued role as collateral and a settlement asset within decentralized finance, tokenized assets, and prediction markets. Circle's second-quarter financial results showed revenue of $701 million, a 7% increase year-over-year, though slightly below analyst expectations. Net income was $48 million, with earnings per share at $0.18, surpassing market forecasts.
The investment firm emphasized that its growth thesis for Circle does not hinge on the CLARITY Act, a proposed legislation aimed at establishing a U.S. regulatory framework for digital assets. Bernstein anticipates that regulatory agencies will expedite the development of crypto rules if Congress fails to pass the act during its September session. Potential avenues for further USDC adoption identified by the analysts include stablecoin payments, tokenization, and blockchain-based capital markets, as well as emerging agent-based payment systems.