Bernstein Maintains Circle Rating, Sees 44% Upside in Stock Price

Bernstein analysts reiterated their "Outperform" rating for Circle Internet Group in a report released on Tuesday. The firm maintained a target price of $190, suggesting approximately 44% upside from Monday's closing price of $131.76.

Despite recent interest rate volatility leading to an 11% sequential decline in Circle's reserve revenue, the presale of $220 million ARC tokens effectively hedged financial pressure. The ARC trade was concluded at a fully diluted network value of $3 billion, providing the company with a critical short-term buffer during interest rate sensitive periods.

Circle's adjusted EBITDA for the first quarter was recorded at $151 million, exceeding market expectations by about 10%. Although the total revenue of $694 million was slightly lower than expected due to interest income, the company demonstrated strong financial transparency and profit elasticity through strict cost control.

The core asset, USDC, maintains its solid market share, with the supply volume climbing to $77 billion in the first quarter, a 28% year-over-year increase. Even against the backdrop of an overall 40% downturn in the crypto market, the balance on Circle's platform still increased to $13.7 billion, demonstrating its hedging attributes in a volatile market.

The analyst highlighted Circle's expansion in the payment infrastructure field, with its payment network's annual transaction volume approaching $10 billion. Currently, 136 financial institutions have joined the platform, and deep partnerships have been established with industry giants such as Meta, DoorDash, and Kyriba. The upcoming launch of the Layer 1 blockchain Arc is seen as a core incremental addition for the future. The testnet data shows that the network has processed over 244 million transactions. Its x402 standard, designed for machine payments, is expected to give USDC a dominant position in the AI-driven micropayment market.

For investors, Circle continues to maintain its performance guidance for the 2026 fiscal year, with an expected compound annual growth rate of USDC supply volume to reach 40%. Bernstein believes that the fee income from tokenized assets will gradually reduce the company's over-reliance on interest rate businesses.

The next focus will be on the formal operation of the Arc mainnet and the penetration rate of the x402 standard in AI software agent payments. With the continuous growth of the stablecoin supply, the market will further evaluate its long-term profitability potential in the non-interest income sector.