Morgan Stanley opened formal coverage of Circle Internet Group (NYSE:CRCL) with an Equalweight rating and assigned a $66.00 price target on Monday. That target is modestly above Circle’s prevailing market price of $63.93, with the shares having declined nearly 10% over the last week, according to InvestingPro data.
In its research note the bank emphasized that Circle issues USDC, the second-largest stablecoin, which it values at roughly $70 billion as of Feb. 1. Morgan Stanley’s neutral posture reflects multiple constraints the firm says limit near-term upside for the stock.
Analyst rationale
Morgan Stanley listed several reasons for an Equalweight rating. The bank pointed to an unclear regulatory path for Circle’s business, the company’s current valuation level, and the fact that Circle’s primary commercial use cases remain concentrated in crypto trading. The research team also flagged pronounced share-price volatility as a consideration for investors.
The note argued that most market participants will likely remain on the sidelines until they see either more stability in medium-term interest rates or meaningful diversification of Circle’s revenue mix. That caution aligns with underlying margin metrics: InvestingPro data cited in the note show Circle operating with gross profit margins of only 5.28%.
Interest income and cost structure
Morgan Stanley specifically called out the direction of U.S. interest rates as a major headwind to Circle’s interest-based revenue. Given the company’s heavily fixed-cost profile, the bank said the combination produces limited visibility into short-term earnings, heightening uncertainty around near-term profitability.
Longer-term opportunity vs. market recognition
While acknowledging Circle’s stated objective of building a new internet financial system as compelling, Morgan Stanley said the market is unlikely to reward the underlying network value until there is clearer evidence of adoption and tangible displacement of legacy financial systems.
Other broker activity and market signals
Several other firms have recently revised their views on Circle. Compass Point moved its rating from Sell to Neutral and set a $60.00 price target, citing the stock’s correlation with Ethereum. Mizuho upgraded Circle from Underperform to Neutral with a $77.00 price target, attributing the change in part to increased USDC usage on the Polymarket platform.
Tiger Securities adjusted its price objective to $85 while retaining a Hold rating, and noted that USDC circulation reached $76.3 billion in Q4 2025, a 12% increase from the prior quarter. The firm also observed that quarter-end balances were slightly below a December peak, representing a 2% quarterly increase.
Shares of Circle climbed after reports that the White House plans to convene banking and cryptocurrency executives to discuss stalled crypto legislation and conflicts between the banking and crypto sectors, including questions over stablecoin holdings.
Outlook
In sum, Morgan Stanley’s initiation frames Circle as a company with a meaningful network proposition but with near-term financial and regulatory uncertainties that could restrain investor participation until clearer signals on rates or revenue diversification emerge.