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Mizuho Initiates Coverage Of Circle Internet Group (CRCL) With Underperform Rating, Price Target At $85
Mizuho Initiates Coverage Of Circle Internet Group (CRCL) With Underperform Rating, Price Target At $85

Yahoo

time15-07-2025

  • Business
  • Yahoo

Mizuho Initiates Coverage Of Circle Internet Group (CRCL) With Underperform Rating, Price Target At $85

Circle Internet Group (NYSE:CRCL) is among the 13 Best Booming Stocks to Buy Now. On July 8, Mizuho initiated coverage of the stock with an Underperform rating, while announcing a price target of $85 for its shares. A Wall Street banker reviewing financial documents in their boardroom. The firm's analysis suggested that Wall Street analysts may be underestimating the impact of declining interest rates on the stock, and hence, overstating the company's growth potential. In a note to clients, Dan Dolev anticipated a potential downside of 25% to 30% to the $4.5 billion full-year consensus for Circle Internet Group (NYSE:CRCL)'s 2027 revenue. The analyst said his estimate of $3.3 billion was more realistic, as it takes into account lower borrowing costs and growth in USDC circulation. He also noted higher distribution costs as a major concern for the stablecoin issuer, with companies like Coinbase holding a significant chunk of the USDC economics. Circle Internet Group (NYSE:CRCL) is a global financial technology company, operating as a network, platform, and market infrastructure for stablecoin and blockchain applications. The stock has surged by over 500% since its IPO in June this year. While we acknowledge the potential of CRCL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 13 Best German Stocks to Invest in Now and Goldman Sachs Stock Portfolio: 10 Large-Cap Stocks To Buy. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Circle Stock Warning: CRCL Could Fall More Than 50% From Here
Circle Stock Warning: CRCL Could Fall More Than 50% From Here

Yahoo

time12-07-2025

  • Business
  • Yahoo

Circle Stock Warning: CRCL Could Fall More Than 50% From Here

Since the initial public offering of stablecoin issuer Circle (CRCL), the company's stock has rallied by a whopping 550%. Wall Street has bought into the story that stablecoins will replace or at least challenge the existing global financial system. However, the severe rally in CRCL shares has created its own set of doubters. Creating a 38% 'Dividend' on SOFI Stock Using Options Joby Aviation Just Hit a New 52-Week High. Should You Buy the Flying Car Stock Here? Nvidia Stock Regains Momentum. Is It Time to Buy, Sell, or Hold NVDA? Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. One of them is Mizuho Securities analyst Dan Dolev, who initiated coverage of CRCL stock with an 'Underperform' rating and a price target of $85. This means that Dolev is expecting the stock to correct by almost 60%. Dolev further commented that, 'We believe consensus does not fully account for looming interest rate cuts, and also overstates USDC's medium-term growth potential. We also worry about rising distribution costs.' Dolev believes that analysts' consensus estimate for 2027 revenue at $4.5 billion is 25% to 30% too high. Before we dive into the merits of Dolev's somber stance, let's have a glance at its financials. Circle has undergone a significant financial transformation over the past two years, marked by rising revenues and new profitability. In 2022, the company reported total revenues of $772.1 million. By the end of 2024, that figure had grown substantially, reaching $1.7 billion. The shift was not limited to top-line expansion as the company turned profitable as well. The net loss of $768.8 million recorded in 2022 gave way to a net income of $155.7 million in 2024, a laudable feat that should not be scoffed at, especially for a company in a domain as volatile as cryptocurrency. A similar shift was observed in operating cash flows. 2022 saw the company generate negative cash flow of $72.7 million. Cut to 2024, and the company posted a positive operating cash flow of $344.6 million. The cash position strengthened accordingly as Circle ended the year with approximately $751 million in cash on hand, a considerable increase from the prior year's closing balance of around $369 million. While highlighting some of the optimism around Circle, I previously highlighted the growing market for stablecoins, Circle's partner network of more than 500, and its moves to diversify beyond USDC. These factors create a compelling and exciting case for investing in the company. Circle's revenue stream relies heavily on interest income from its reserves, which are fully backed by cash and short-term U.S. Treasury instruments, providing stability. In principle, when more users adopt and transact using USDC, this pushes reserve balances higher, leading to a rise in Circle's top line. At the same time, there are external developments that offer support. The momentum behind stablecoins has picked up, especially after the Senate gave its nod to the GENIUS Act, which now awaits approval from the House of Representatives. The bill is viewed as an important step toward providing regulatory clarity in the U.S. for dollar-based stablecoins. Its passage would also establish digital tokens like USDC as valid forms of payment, placing them on similar footing with tools like debit cards or bank transfers. Such legal recognition could push stablecoins into the mainstream, shifting the narrative away from their earlier associations with speculative crypto assets. Separately, Shopify's (SHOP) recent partnership with Coinbase (COIN) to integrate the Base protocol introduces USDC into daily transactions across a wide global merchant base. Though Circle was not directly involved in the agreement, it stands to benefit. As the issuer of USDC, Circle gains from any increase in the stablecoin's real-world relevance. Greater use in commerce adds to the USDC's credibility and reinforces its value proposition as a practical settlement asset, not just a digital store of value. Finally, Circle is not just relying on macroeconomic or partnership-led growth. The company has already built technical infrastructure that supports cross-border payments on and off the blockchain. Developing this kind of ecosystem takes significant time and effort, creating a natural moat. Moreover, its long-standing ties with banks, payment processors, and crypto platforms contribute to network effects that are hard to replicate quickly. These relationships deepen Circle's entrenchment in the broader digital payments ecosystem and may insulate it from new competition as the space evolves. An immediate reason to not invest in Circle stock now is its humongous growth since its IPO. The stock is trading at a forward price-earnings ratio of 160x. This is considerably higher than the sector median of 24.3x. As I stated above, Circle brings in the bulk of its revenue from interest generated through its reserves. This is both a positive and a negative. These reserves, which grow in parallel with USDC issuance, are composed mainly of short-dated U.S. government securities and cash-like assets. That link between rising USDC supply and interest income creates a dependable revenue base when interest rates are favorable. However, if the Federal Reserve begins to ease monetary policy and reduce rates, Circle's top line could suffer materially. The company's exposure to policy shifts of this nature leaves it vulnerable to macroeconomic trends. Additionally, Circle is not retaining all of what it earns. A significant portion of the interest income is shared with distribution partners like Coinbase. This arrangement is already a drag on margins, and management has suggested that the share given to partners could increase further with the rationale being that Circle is focused on expanding USDC's adoption. That growth, while valuable, could arrive with diminishing returns. If these payout obligations continue to rise, the company might find itself in a vicious 'circle' where higher volumes fail to deliver matching profits, and the expansion of its network weighs on its earnings rather than lifting them. Finally, competition in the stablecoin space is heating up. Collaborations between blockchain developers and trading platforms have the potential to produce rival offerings with broad reach. For example, PayPal (PYPL) is one company that continues to grow its stablecoin offering. Overall, analysts have attributed a rating of 'Moderate Buy' for CRCL stock with a mean target price of $184.36 which has already been surpassed. The high target price of $250 indicates an upside potential of about 25% from current levels. Out of 13 analysts covering the stock, six have a 'Strong Buy' rating, one has a 'Mdoerate Buy' rating, four have a 'Hold' rating, and two have a 'Strong Sell' rating. On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on

Circle Stock Could Plunge 59%, Mizuho Issues Sell Rating
Circle Stock Could Plunge 59%, Mizuho Issues Sell Rating

Business Insider

time09-07-2025

  • Business
  • Business Insider

Circle Stock Could Plunge 59%, Mizuho Issues Sell Rating

Mizuho Securities' top analyst Dan Dolev initiated coverage of Circle Internet stock (CRCL) with a 'Sell' rating and $85 price target, implying a significant 59% downside potential from current levels. Dolev's bearish view on CRCL stems from his belief that the consensus revenue estimate for FY27 is highly optimistic and does not fully account for the potential impact of future interest rate cuts. Don't Miss TipRanks' Half-Year Sale Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Additionally, the analyst stated that the consensus is overestimating the medium-term growth potential of Circle's USDC stablecoin. Dolev sees a 25% to 30% downside risk to the fiscal 2027 consensus revenue estimate of $4.5 billion. Furthermore, the passage of the GENIUS Act has widened the potential for circulation and adoption of stablecoins, but it has also opened up competition for more companies to enter the market. Circle could face heightened competition from rivals such as PayPal (PYPL) and Ripple (RLUSD), both of which already have their own stablecoins. Circle Faces Rate, USDC Pressures Dolev noted that the consensus revenue projection for FY27 ($4.5 billion) implies a CAGR (compound annual growth rate) of 30% to 40%. This estimate requires a substantial increase in USDC circulation and/or persistently high interest rates. Meanwhile, Dolev stated that consensus expects about five rate cuts through 2027, and USDC circulation has, in fact, flattened since April. Considering these factors, the analyst projects a 25% to 30% downside revision to the 2027 consensus revenue estimate. Coinbase Stands to Gain the Most Circle and its partner, Coinbase Global (COIN), are the primary issuers of USDC, currently the world's second-largest stablecoin. Dolev stated that although Circle mints the stablecoin, the real beneficiary of the partnership is Coinbase due to rising distribution costs. These costs have reduced Circle's net revenue margin from 61% in 2023 to roughly 39% in Q1FY25. Net revenue margin is defined as reserve income less distribution costs. Under the terms of the Circle-Coinbase partnership, COIN earns full interest income on USDC held on its platform, which accounts for about 25% of USDC in circulation. Plus, it earns 50% of the income from USDC held outside of Circle and Coinbase's platforms. The proportion of USDC circulation held on Coinbase's platform has grown from 8% in 2023 to 22% in 1Q25, driven by the rewards offered on its platform. Is Circle Stock a Buy, Hold, or Sell? Analysts prefer to remain sidelined on Circle Internet stock due to uncertainty about the future of the stablecoin market. On TipRanks, CRCL stock has a Hold consensus rating based on five Buys, five Holds, and two Sell ratings. Also, the average Circle price target of $185.73 implies 10.5% downside potential from current levels.

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