Mizuho bearish on Circle's stock, says market overstates USDC's medium-term growth outlook

Despite a soaring debut on the New York Stock Exchange, Mizuho Securities says pump the brakes on Circle Internet Group’s stock.

The shares have rocketed higher from their IPO price of $31, becoming a retail favorite amid optimism over crypto regulation. But analysts at Mizuho say the rally may be getting ahead of itself.

Mizuho analysts led by Dan Dolev initiated coverage on Circle's stock (ticker CRCL) with an "underperform" rating and an $85 price target, suggesting a significant downside from current levels above $200 per share. The analysts do not view CRCL's valuation as appropriately reflecting key risks to the earnings over the medium term.

"Over time, we also worry that the advancement of regulation like the GENIUS Act invites more competition and raises commoditization risk for dollar-based stablecoins like USDC," Dolev wrote Tuesday in a note to clients. He noted three main risks include looming interest rate cuts, "relatively stagnant" USDC circulation, and structurally high distribution costs.

Circle shares trade down 1.3% to $204.70 at the time of publication, according to The Block's CRCL price data .

Circle’s USDC is the world’s second-largest stablecoin by market cap, behind Tether’s USDT. USDC's market cap sits around $62 billion, while USDT's is around $159 billion cap, according to The Block's data dashboard.

The analysts believe Circle’s projected 2027 revenue of $4.5 billion may be 25% to 30% too high, assuming either significantly higher USDC adoption or continued high interest rates. However, with interest rates expected to fall and USDC supply remaining flat at around $62 billion since April, Mizuho suggests that those targets may be unrealistic.

Although Circle issues USDC, most of the earnings are distributed to partners like Coinbase. These distribution costs have risen fast, cutting Circle’s profit margin from 61% in 2023 to 39% in early 2025, according to Mizuho. Coinbase, which shares in USDC earnings both on and off its platform, is attracting more USDC by offering yield, growing its share of USDC from 8% to 22% in just over a year.

While Circle has built a strong reputation through its transparency and compliance, new regulations, such as the GENIUS Act, could open the door to more competitors. Notably, Circle has  recently applied for a U.S. banking license, which would enable the company to act as a custodian for its USDC reserves.

On the flipside, Bernstein set a $230 price target on Circle's stock, calling it the "internet dollar network for the next decade."