Circle Internet (CRCL) stock got a rare downgrade to Sell (from Hold) by Compass Point analyst Ed Engel. He also trimmed his price target from $79 to $77, implying 18.5% downside potential. The news dragged CRCL shares down 1.5% in after-hours trading yesterday.
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Circle specializes in stablecoins and blockchain technology. It issues and manages USDC, a dollar-pegged stablecoin used for crypto payments, trading, and transfers. Over the past month, CRCL stock has dropped 15.6% despite revenue growth. A slump in the broader cryptocurrency market and uncertainties around the GENIUS Act have added pressure on shares.
A revised Clarity Act bill proposes limiting issuers like Circle from offering yields on USDC holdings, restricting rewards to activity-based uses like payments, trading, or lending. This could erode stablecoins’ appeal, which relies on bank-like interest rates.
Engel Flags Margin Compression
Engel noted that USDC has shown notable resilience amid the current crypto market cycle. However, he expects USDC’s growth to move into less profitable areas, such as non-yield-bearing reserves or lower-margin partnerships. His downgrade aligns with expectations of contracting gross margins for CRCL in the first half of 2026.
Circle’s stock surged after its late-2025 earnings, fueled by USDC’s durability and hopes for margin expansion. The stock now trades at a premium 40x optimistic 2027 estimated EBITDA (earnings before interest, taxes, depreciation, and amortization) multiples. This valuation assumes USDC supply picks up by mid-2026. With USDC supply growth stagnating and first-half 2026 margins set to decline, Engel sees analysts cutting their 2026-27 estimates. His 2027 profit estimate now sits 20% below Street consensus.
Is CRCL a Good Stock to Buy?
On TipRanks, Circle stock has a Moderate Buy consensus rating based on 11 Buys and six Hold ratings. The average Circle Internet price target of $136.53 implies 44.6% upside potential from current levels.
