Circle shares rose on Thursday after Bernstein reaffirmed its Outperform rating and $140 price target, saying the stablecoin issuer’s second-quarter performance offered a strong challenge to bearish arguments about the company.
Analysts at the brokerage, led by Gautam Chhugani, described Circle’s results as a “counter thesis to the bears” in a note to clients.
Bernstein maintained its $140 target, despite having reduced it from $190 in late July. The revised target remains more than twice Circle’s closing price of $65.29 on Thursday.
Circle reported total revenue and reserve income of $701m for the second quarter, a 7% increase on the same period last year. However, the figure was about 2% below consensus expectations, contributing to the mixed reaction to the results.
Underlying profitability was more encouraging. Adjusted EBITDA increased by 8% year on year to $143m, while basic earnings per share came in at $0.19, ahead of forecasts.
Net income from continuing operations was $48m, an improvement of $530m compared with the previous year. The earlier period had included costs associated with Circle’s initial public offering.
The company remains heavily dependent on income generated by its reserves. Reserve income accounted for about 95% of total revenue during the quarter, meaning Circle remains vulnerable to movements in US interest rates. A reduction in the federal funds rate would lower the returns earned on the assets supporting USDC.
USDC circulation stood at $73.3bn at the end of the quarter. That was 19% higher than a year earlier, but down 5% from the $77bn recorded at the end of the first quarter.
Circle also reported onchain transaction volume of $14.8tn, representing a 151% year-on-year increase. The figures indicate that activity across the network grew considerably faster than the supply of USDC in circulation.
Bernstein said the market’s concerns about competition between stablecoin issuers did not fully reflect Circle’s distribution reach, liquidity position and regulatory advantages. Its analysts expect USDC use to spread beyond cryptocurrency trading into payments, tokenised real-world assets and institutional financial infrastructure.
The company has also received final approval from the US Office of the Comptroller of the Currency to establish Circle National Trust. The federal trust bank charter will place part of Circle’s infrastructure under direct US oversight and could eventually allow the entity to manage USDC reserves.
Bernstein highlighted Circle’s Arc blockchain and its partnerships in payments as potential sources of income that could reduce the company’s reliance on interest earned from USDC reserves.
Circle plans to launch Arc’s public mainnet on 16 September. Its founding validators will include BlackRock, DTCC, Galaxy, Global Payments, ICE, Mastercard, MoneyGram, SBI Group, Standard Chartered, Sumitomo Corporation and Visa.
Management raised its 2026 forecast for other revenue and for its revenue-less-distribution-cost margin. The updated outlook includes an expected $180m contribution from the recognition of an Arc token presale.
Bernstein said current forward estimates might not fully reflect possible income from Arc staking, gas fees, transaction activity and partnership agreements. Those areas could diversify Circle’s business, although their eventual contribution will depend on adoption following the mainnet launch.
CRCL finished Thursday 3.18% higher at $65.29 after trading between $60.01 and $65.91. The stock moved above the midpoint of its daily Bollinger Bands, which stood at $63.84, suggesting improved short-term momentum.
The relative strength index rose to 47.9 from a moving average of 44. It remains below the neutral 50 mark, indicating that buyers have yet to establish firm control.
Technical resistance is currently positioned between $68.80 and $70. A daily close above that area could support a wider recovery, while a failure to hold $60 would put the lower Bollinger Band, near $58.87, in focus.
Despite Thursday’s gain, Circle remains in a broader downtrend after falling from above $130 in May. Bernstein’s $140 valuation therefore depends on the company restoring growth in USDC circulation, successfully launching Arc and building revenue streams that are less affected by changes in US interest rates.
