Citi Begins Coverage of Circle With a Buy, Saying Its Valuation Isn’t Excessive

Citi Initiates Buy Rating on Circle, Predicts Significant Upside

Citigroup has started covering Circle (CRCL), giving the stock a Buy rating and projecting a potential 34% increase in its share price. The bank issued a price target of $243, compared to Circle’s Monday closing price slightly above $181.

Although Circle’s stock has surged considerably since its market debut, Citi believes its valuation remains justifiable. The company went public at $31 a share, soared to a record $299 last week, and has since settled lower.

Stablecoins like those issued by Circle are digital currencies pegged to traditional assets, such as government-issued currencies or commodities, and play an essential role in crypto trading and cross-border transactions.

Led by analyst Peter Christiansen, Citi’s report points to Circle’s neutrality as a key competitive advantage in the increasingly crowded stablecoin sector. The report also cites factors like Circle’s operating efficiency, sizable market opportunities, regulatory tailwinds, and high operating leverage as strong reasons for its growth potential.

“The core strength for Circle lies in its neutrality, which will be crucial in avoiding stablecoin market fragmentation and holding its leading position,” the report noted.

Thanks to Circle’s low capital requirements and significant operational leverage, Citi sees the company as well-positioned to deliver robust returns if it captures a larger share of the growing stablecoin market.

Still, Wall Street isn’t unanimous in its outlook. JPMorgan also began coverage of Circle on Monday but took a cautious approach, assigning an Underweight rating and flagging concerns about the stock’s valuation.