Bernstein cuts Circle target to $140 as Open USD threat fades

Bernstein lowered its Circle price target by 26% to $140 but kept an Outperform rating, arguing the Open USD consortium that pressured the stock is a weaker competitive threat than the market believes.

Bernstein cut its Circle Internet Group price target 26% to $140 from $190 on July 29, maintaining an Outperform rating and telling clients the Open USD consortium threat that hammered the stock will fade.

"The Open USD consortium members are the same entities already signing MOUs with Circle," Gautam Chhugani, analyst at Bernstein, said in a note published Wednesday. "We see the threat as overstated."

Circle shares closed at $64.32 on July 28, leaving the new $140 target implying about 118% upside. USDC supply ended the second quarter at roughly $73 billion, down from $77 billion at the end of the first quarter, though average supply rose modestly to about $76 billion, according to Bernstein. The firm values Circle on a long-term discounted cash flow basis at roughly 23 times 2028 estimated adjusted EBITDA.

The June launch of Open USD — a consortium backed by more than 140 payments, banking and fintech names including Visa, Mastercard and Stripe — weighed on Circle's stock. But Bernstein pointed to a Samsung official's earlier comment that there were no formal consultations on OUSD and that the company did not know what role it would play, undercutting the consortium's cohesion. Visa management added on its latest earnings call that it would remain multi-coin and multi-chain, signaling no exclusive commitment to OUSD.

Reserve income holds as Hyperliquid deal weighs

Circle's revenue is naturally hedged against interest rate shifts, in Bernstein's framing. The average SOFR eased to 3.62% in the second quarter from 3.66% in the first quarter, pulling the reserve return rate down to about 3.46%. Reserve income held near $655 million, up from $653 million the prior quarter.

The Hyperliquid arrangement remains the clearest drag on that line. Circle and Coinbase agreed in May to share about 90% of the reserve income earned on USDC held on Hyperliquid, in exchange for USDC becoming the exchange's primary quoting, settlement and margin asset. USDC balances on Hyperliquid climbed from $5 billion in mid-May to more than $6 billion, generating an estimated $210 million in annualized gross reserve income, of which roughly $190 million is redirected to the exchange each year, according to the note. The full margin impact lands from the third quarter.

Supply estimates cut, long-run thesis intact

Bernstein slashed its end-of-2026 USDC supply estimate by 37% to $83 billion and its 2028 figure by 40% to about $170 billion, adjusting for crypto market weakness while keeping its 10-year supply growth rate at 32%. The revisions cut reserve income estimates for 2026 through 2028, lowering the firm's 2026 adjusted EBITDA forecast by 12% to $602 million and its 2026 EPS estimate to 92 cents from $1.98.

Yet the long-run call is unchanged. Bernstein expects total stablecoin supply to reach about $4 trillion by 2035, with Circle holding roughly a 30% share. The analysts frame USDC's regulatory lead, crypto-distribution liquidity and expanding payments footprint as the basis for that position even as competition intensifies.

Circle's regulatory standing firmed in July, when it won final OCC approval to establish Circle National Trust, a federally regulated national trust bank that will provide digital-asset custody — reportedly the first such approval of its kind for the company.

This article is for informational purposes only and does not constitute investment advice.