Mizuho, a prominent investment bank, has launched coverage of Circle Internet Group with an Underperform rating and a price target of $85 per share. As one of the few initial public offerings in 2025, Circle’s stock has notably soared by 149% since its June listing, despite warnings from major investment banks regarding its overvaluation. Notably, the stock has declined 21% from its peak in June.
The bank cautions that Circle Internet could face revenue risks of up to 30% below the consensus estimates for fiscal year 2027, projected at $4.5 billion. Circle, best known for its stablecoin, USDC, has experienced increased retail investor interest in the wake of public concerns about U.S. fiscal health and government spending. Mizuho contends that the market is overestimating the value of Circle’s USDC and that the revenue projections do not adequately reflect potential interest rate cuts while also exaggerating growth prospects for USDC in the medium term.
Mizuho’s Underperform rating aligns with sentiments expressed by Goldman Sachs and JPMorgan. In a note from June, JPMorgan acknowledged Circle’s advantageous market position and the potential for growth in digital transactions but described its current market value as “elevated” with an $80 price target. Similarly, Goldman Sachs set a target of $83, recognizing Circle’s early mover advantage in the stablecoin sector.
Mizuho further highlights a potential downside of 25-30% to the consensus revenue estimates. Concern extends to Circle’s revenue-sharing agreement with Coinbase, which complicates its financial outlook. As Circle distributes USDC, it shares 50% of its revenue with Coinbase, which was instrumental in establishing the stablecoin. Consequently, Coinbase retains half of the revenue from Circle’s USDC reserves.
In the previous year, Circle reported $1.7 billion in revenue, from which it allocated approximately $1 billion to distribution costs, over 90% of which went to Coinbase. Mizuho is particularly anxious about increasing distribution costs, projected to grow at a compound annual growth rate of 88% from 2022 to 2024, compared to a 50% growth for reserve income, which favors Coinbase significantly in the revenue-sharing framework.
Rather than the consensus revenue estimate of $4.5 billion for FY27, Mizuho suggests that a more realistic figure would be $3.3 billion. This adjustment assumes a moderate 30% compound annual growth rate for USDC circulation from the second quarter of 2025 to the fourth quarter of 2027, alongside more than 100 basis points lower interest rates. Mizuho advocates for a reevaluation of Circle’s valuation to reflect these adjusted expectations about interest rates and stablecoin growth rates.
