Compass Point starts Circle with a Neutral on threat of new entrants

As previously reported, Compass Point initiated coverage of Circle (CRCL) with a Neutral rating and $205 price target While the firm believes stablecoins can disrupt the financial system as blockchains disintermediate banks and payments networks and notes that Circle provides “pure-play exposure to this disruptive technology” as the largest issuer of regulated stablecoins, it cites the threat of new entrants and declining gross margins for its Neutral rating. USDC’s “leading tech and liquidity provide long-term advantages” and Circle’s current distribution partners are large players in crypto, but mainstream businesses have much broader connectivity to end users, the analyst argues. Given the current valuation, it is “clear investors aren’t valuing the stock on near-term earnings,” the analyst added.