Original Article Title: "Heaven or Hell? Bernstein Bullish on Circle Stock Price Rising Another 30%, While JPMorgan is Bearish and Expects a 50% Drop"
Original Article Author: Editor Jr., BlockTempo News
The issuer of the USD stablecoin USDC, Circle, was officially listed earlier this month with the stock ticker CRCL. According to Google Finance data, as of the evening US stock market trading on June 30 (Taiwan time), CRCL was trading at around 180 US dollars, nearly 6 times higher than its IPO price of 31 US dollars, with a market capitalization of 40.2 billion US dollars. During this period, the price even briefly surpassed 260 US dollars, attracting significant attention from the financial markets.
Facing the astonishing surge of CRCL, according to The Block, Wall Street's top investment bank Bernstein has initiated coverage on Circle for the first time and given it an "outperform" rating with a target price of 230 US dollars. The core reasons behind Bernstein's assessment include:
1. Stablecoin Market Growth Expectations: Bernstein estimates that the total market value of stablecoins could grow from 244 billion US dollars to 4 trillion US dollars over the next decade, with USDC's market share in the stablecoin market increasing from the current 25% to 30%. Although still lagging behind its competitor Tether's USDT, this is enough to drive its stock price higher;
2. Regulatory Policy Advantage: If the US stablecoin bill, the GENIUS Act, is passed, USDC will benefit from the advantage of obtaining an "early regulatory pass";
3. Financial Growth Model: In Bernstein's ten-year discounted cash flow model, they forecast a compound annual revenue growth rate of 47% for Circle from 2024 to 2027, and a compound annual EBITDA growth rate of 71%, thereby recommending investors to buy on dips.
Note: EBITDA stands for "Earnings Before Interest, Taxes, Depreciation, and Amortization." It is a financial metric used to measure a company's operating performance and profitability, reflecting the core operating profit before deducting interest, taxes, depreciation, and amortization.
However, on the same day, JPMorgan Chase issued a report stating that the bank initiated coverage of Circle for the first time and gave it a "Underweight" rating, with a target price of $80 for the end of 2026, citing the following reasons:
1. High Valuation: Based on a 45x price-to-earnings ratio (P/E) calculation using expected earnings per share (EPS) for 2027, and an additional $10 upside potential premium, JPMorgan Chase believes that Circle's current valuation is too high;
2. Competitive Pressure: Competitors such as USDT, tokenized deposits, and cryptocurrency funds may share liquidity, putting pressure on USDC's growth prospects from competing entities;
3. Policy and Market Risks: If the U.S. were to introduce higher capital requirements for stablecoin issuers in the future, or if the widespread adoption of central bank digital currencies (CBDCs) occurs, it would also squeeze Circle's profits.
Bernstein and JPMorgan Chase diverge on three key assumptions:
· Total Addressable Market: Bernstein sees it as a $40 trillion opportunity, while JPMorgan Chase takes a more conservative estimate.
· Potential Risks: Bernstein assumes high growth can be sustained long-term, while JPMorgan Chase factors in regulatory and competitive risks in their valuation.
· Model Selection: The former measures high Beta stocks using discounted cash flow, while the latter uses target P/E ratio plus brand premium as their assessment criteria.
Bernstein and JPMorgan Chase's analyses are both grounded in rationale. If USDC can maintain its market share and secure a clear regulatory framework, the bullish scenario may materialize; however, if competitors rise rapidly or if there is a policy shift, JPMorgan Chase's $80 warning should not be ignored. The future performance of CRCL will validate which prediction holds true, making it a development worth monitoring.
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