Mizuho Downgrades Circle to Underperform and Cuts Price Target to $50

Mizuho downgraded Circle to underperform from neutral on July 14 and cut its price target to $50 from $85. The Japanese investment bank said OpenUSD's pass-through model could force Circle to share more reserve income with distribution partners. Analysts led by Dan Dolev stated that the model differs from Circle's approach of retaining a large portion of treasury yield before sharing revenue.

OpenUSD, unveiled June 30 by the Open Standard consortium, charges a small operating fee and distributes most reserve income to issuers and distributors. The consortium includes more than 140 partners such as Mastercard, Stripe, Coinbase and BlackRock. Mizuho lowered its 2027 adjusted EBITDA forecast for Circle to $699 million from $1.09 billion.

The new estimate sits about 25 percent below Wall Street consensus of $941 million. The bank raised its projection for Circle's 2027 distribution and transaction costs to 73 percent from 64 percent. Circle shares traded at $62.63, down 0.6 percent, at the time of the report.

USDC circulating supply has fallen to about $73 billion from nearly $80 billion in March. The broader stablecoin market has shrunk by roughly $10 billion since May. Circle is scheduled to renegotiate its revenue-sharing agreement with Coinbase, its largest distribution partner, in August.

JPMorgan said in a Tuesday research report that Hyperliquid's deal with Circle and Coinbase creates a prisoner's dilemma that pressures earnings from USDC.