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Bernstein reiterates optimism for Circle: Q2 performance alleviates concerns over stablecoin competition, maintains target price of $140

According to The Block, research firm Bernstein reaffirmed its "Outperform" rating and maintained a target price of $140 after Circle announced its Q2 2026 financial results, believing that the company's latest performance constitutes a "reverse validation" of the market's bearish views. Bernstein analysts stated that the market currently underestimates USDC's long-term growth potential and Circle's advantages in distribution channels, liquidity, and regulatory compliance, due to two major core concerns regarding Circle—intensifying competition in stablecoins and changes in the interest rate environment that may affect reserve income.Investors may not have fully accounted for the future revenue opportunities from transaction fees, partner ecosystems, and the Arc blockchain that Circle could generate. The firm specifically pointed out that several infrastructure initiatives recently advanced by Circle, including obtaining a national trust bank license in the U.S., expanding the Circle Payments Network, and the planned launch of the Arc public chain mainnet on September 16, could all become future growth drivers. Additionally, Bernstein noted that Circle has raised its guidance for other revenues and profit margins after deducting distribution costs for 2026, expecting to confirm approximately $180 million in Arc token presale revenue.Analysts believe that future staking yields, gas fees, and ecosystem partnership revenues from Arc have not been fully reflected in current valuation expectations. As of the end of Q2, the circulating supply of USDC was $73.3 billion, a decrease of 5% from the previous quarter but an increase of 19% year-over-year. Bernstein believes that Circle is shifting from a purely crypto trading infrastructure to payments, real-world asset (RWA) tokenization, and broader financial infrastructure, which will drive USDC into the next phase of growth. Circle's stock closed at $63.28 on Wednesday, and Bernstein's target price of $140 implies a potential upside of about 121%.

Bernstein lowers Circle's target price to $140, determining that the threat from Open USD will weaken

According to The Block, Bernstein has lowered Circle's target price from $190 to $140 while maintaining an outperform rating. Analyst Gautam Chhugani stated that the threat posed to Circle by the Open USD Alliance, supported by over 140 institutions including Visa, Mastercard, and Stripe, is lower than market expectations. As of July 28, Circle's closing price was $64.32.The end-of-quarter supply of USDC for the second quarter was approximately $73 billion, down from $77 billion in the first quarter, with the average supply rising to about $76 billion. The average SOFR for the second quarter decreased to 3.62%, the reserve return rate fell to 3.46%, and reserve income rose to approximately $655 million. The USDC balance on Hyperliquid has increased from $5 billion in mid-May to over $6 billion, generating about $210 million in annualized gross reserve income, of which approximately $190 million is directed to the exchange according to the revenue-sharing agreement.Bernstein has reduced its forecast for USDC supply at the end of 2026 by 37% to $83 billion and lowered its 2028 forecast to $170 billion; the adjusted EBITDA forecast for 2026 has been cut by 12% to $602 million, and the earnings per share (EPS) forecast has been lowered from $1.98 to $0.92. However, the firm expects that by 2035, the total supply of stablecoins will reach $4 trillion, with Circle holding about a 30% share. Additionally, Circle received final approval from the OCC in July to establish Circle National Trust.
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