Morgan Stanley Cuts CRCL Target 64% to $38 on USDC Scale Contraction

Analyst downgrades Circle to Underweight, citing USDC reserve income sensitivity and weak agentic payment volumes. 2027-2028 scale assumptions drop 33-44%, lowering EPS forecasts below consensus.

Woofun AI reports that Morgan Stanley analyst James Faucette has downgraded Circle (CRCL) from Equalweight to Underweight, reducing the target price from $106 to $38. Faucette noted that shrinking USDC scale highlights the sensitivity of Circle’s reserve income, shifting revenue toward lower-margin transaction fees. The firm decreased USDC scale assumptions for 2027 and 2028 by approximately 33% and 44%, respectively, leading to GAAP EPS expectations roughly 3% and 20% below market consensus. Faucette cited threats from tokenized money market funds and deposits to USDC balances, alongside a weak economic structure for USYC. Agentic payments remain negligible with an average daily volume of $41,900, implying an average transaction size of about $0.24.

Additionally, Open USD’s introduction of shared governance and reserve economic models has increased the cost of maintaining USDC distribution.