Key insights
- Needham lowered its price target for Circle (CRCL) to $190 from $250, citing lower interest rate expectations and higher expenses, despite maintaining a Buy rating. While Circle's Q3 results exceeded expectations with strong USDC growth, management guided for a lower reserve margin. The firm's revised estimates reflect a more conservative outlook on profitability and interest income, though they still anticipate significant revenue growth. The development of Circle's Arc blockchain is noted as a potential long-term driver.
Investing.com - Needham lowered its price target on Circle Internet Group (NYSE:CRCL) to $190.00 from $250.00 on Thursday, while maintaining a Buy rating on the stablecoin issuer. The new target still represents significant upside from CRCL’s current price of $86.30, which has fallen 13.71% over the past week.
The price target reduction follows Circle’s third-quarter 2025 results, which showed revenue and adjusted EBITDA exceeding expectations. The company reported that its USDC stablecoin in circulation grew 108% year-over-year, outpacing the broader stablecoin market growth of 59%.
Circle management guided for a modestly lower reserve margin in the fourth quarter compared to the third quarter. Needham expects this margin could continue to decrease slightly as new partners are added, though it believes these partners are growth-oriented and incentivized to drive USDC adoption.
The firm’s analysts lowered their estimates to reflect lower interest rates and higher expenses, particularly in information technology and wages. The new price target represents 29 times Needham’s discounted 2028 EV/EBITDA estimate. InvestingPro data shows Circle currently operates with weak gross profit margins of just 5.28% and is not profitable, with an EBITDA of -$143.24 million over the last twelve months.
Circle recently launched the public testnet for its Layer 1 blockchain called Arc and is exploring a native token. While Needham believes Arc’s near-term revenue impact will likely be limited, it notes that Circle could run validators to earn fees. Despite profitability challenges, analysts expect Circle’s revenue to grow 63% this year. InvestingPro offers additional insights with 12 more ProTips and a comprehensive research report that could help investors better understand Circle’s potential amid its current valuation challenges.
In other recent news, Circle Internet Group reported strong third-quarter 2025 financial results, surpassing earnings expectations with an earnings per share (EPS) of $0.64, compared to the forecasted $0.34. The company also achieved a total revenue of $740 million, marking a 66% year-over-year growth, and exceeded consensus estimates by 5%. Despite these positive earnings, Baird lowered its price target for Circle Internet Group from $144 to $110, citing cost concerns, while maintaining a Neutral rating.
Meanwhile, Bernstein continues to rate the stock as outperform, despite a 10% drop in share price due to rate cut fears. Mizuho raised concerns about the company’s fiscal year 2025 guidance, noting growth challenges despite Circle’s solid third-quarter results. The investment firm expressed caution over the implications of the company’s forward guidance. These recent developments reflect a mix of strong financial performance and cautious outlooks from analysts.
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