Wall Street broker Bernstein said Circle (CRCL) could suffer a revenue decline if U.S. rates fall sharply, but strong demand for stablecoins and operating leverage could help soften the blow.
Each 25 basis point cut in rates would reduce 2027 revenues by about 9% and EBITDA by 11%, with rates below 2% implying $668 million in EBITDA and 33% compound annual growth (CAGR) from 2024 to 2027, analysts led by Gautam Chhugani wrote in Tuesday’s report.
Stablecoins are cryptocurrencies whose value is tied to another asset, such as the US dollar or gold. They play a major role in cryptocurrency markets, providing payment infrastructure, and are also used to transfer money internationally. Tether’s USDT is the largest stablecoin, followed by Circle’s USDC.
The broker has an Outperform rating on Circle stock with a price target of $230. The stock was down 2.3% in early trading, around $134.40.
Even in a low-rate scenario, Circle’s USDC supply could surpass the $170 billion base case as lower borrowing costs drive risk appetite and demand on exchanges like Binance and in decentralized financial markets (DeFi), where USDC is a key collateral asset, Bernstein said.
“We expect the industry’s total stablecoins to reach approximately $670 billion by 2027E, largely driven by growth in crypto capital markets,” the analysts wrote, and “Circle’s USDC will increase its market share to 33% by 2027E.”
The broker expects Circle’s operating margins to widen to 51% by 2027, from 43% in 2024, as supply increases fivefold, allowing profitability to hold up even as floating revenue declines.
Other revenue, a high-margin line related to integration and transaction services, is also growing rapidly, reaching 9% of total revenue in the down case, the report notes.
Bernstein concluded that Circle’s earnings remain rate-sensitive, but growth and scale of demand should keep the company resilient.
Learn more: Citizens Begin Circle Coverage with Market Performance Assessment on Stablecoin Growth and Valuation
