This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Investment bank Mizuho initiated coverage of Circle Internet Group today with an Underperform rating and a $85 share price target. Circle is among the few IPOs in 2025 so far, and the shares are among the top-performing stocks of the year. Since the firm listed the shares for trading in June, they have gained 149% despite major investment banks warning about overvaluation. Mizuho's share price target also keeps this them and comes as the stock is down 21% from its peak in late June.
Mizuho Warns Circle Internet Faces As Much As 30% Downside Revenue Risk Over Consensus Estimates In FY27
Circle, known primarily for its stablecoin USDC, has benefited from retail investor interest as worries about US fiscal health, deficits and government spending grip the public's imagination. Mizuho believes that the market is overvaluing Circle's USDC, as it shares that the consensus FY27 revenue estimates of $4.5 billion do not account for "looming interest rate cuts" and also overstate "USDC's medium-term growth potential."
Mizuho's Underperform rating of the stock mirrors that set by investment banks Goldman Sachs and JPMorgan. In a note issued in June, JPMorgan admitted that Circle enjoyed an early mover advantage and could benefit from the growth in digital transactions. Yet, the bank called Circle's current market value "elevated" as it assigned an $80 share price target. Goldman's $83 price target was in a similar range to JPMorgan and Mizuho's, and the note was also appreciative of the potential offered to Circle by its early mover advantage in the stablecoin market.
Mizuho believes Circle faces a "25-30% potential downside" to the FY27 consensus revenue estimates of $4.5 billion. Another aspect that has worried the bank is Circle's partnership with Coinbase. While Circle distributes USDC and, as a result, enjoys tailwinds from the stablecoin's growing demand, it shares 50% of its revenue with Coinbase as Coinbase also helped set up USDC. Coinbase is entitled to 50% of revenue from Circle's USDC reserves.
Along with its revenue-sharing model, Circle also pays a large chunk of its overall distribution costs to Coinbase. Last year, out of its $1.7 billion in revenue, Circle paid roughly $1 billion in distribution costs, with more than 90% going to Coinbase. The revenue sharing and distribution costs are also on Mizuho's mind as the investment bank notes that it's worried "about rising distribution costs (88% 2022-24 CAGR vs. 50% for reserve income) as partners like COIN retain the lion's share of USDC economics."
As opposed to the $4.5 billion in FY27 consensus revenue estimates, Mizuho believes that a $3.3 billion estimate "is more realistic" as it "assumes a healthy ~30% USDC circulation CAGR from 2Q25-4Q27 (vs. flat growth since April) and >100bps lower interest rates." In other words, Mizuho holds the view that the market should price interest rate cuts and tame its estimates about the growth rates for stablecoin circulation to bring Circle's valuation to a reasonable level.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
Follow Wccftech on Google to get more of our news coverage in your feeds.
