JPMorgan, an influential American investment bank, has initiated coverage on Circle (CRCL) with an 'underweight' rating and a price target of $80 by December 2026.
JPMorgan analysts led by Kenneth Worsington presented the first official analysis of Circle's shares on Monday in the 'North American Equity Research' report seen by Cointelegraph.
The forecast, reduced by 55% from the current CRCL price of $180, is based on a 45-times multiple of estimated earnings per share (EPS) in 2027 plus a $10 premium for potential growth.
"Our target price reflects a significant premium to the IPO price of $31, but also a substantial discount to the current stock price of $180," the analysts wrote.
Although Circle appears promising while maintaining its current market positions, JPMorgan analysts believe that the company's current market capitalization is overvalued.
The expected capitalization by December 2026 is $21 billion. The report noted that the mid-point of the IPO was valued at $31 or a market capitalization of $8 billion.
JPMorgan analysts mentioned that competitive pressures could affect the company's value in the coming months, including threats from external competition.
They pointed to the risk that some companies could capture a significant market share through lower switching costs and leverage the network created by Circle.
Additionally, analysts point to compliance standards that may require issuers like Circle to have capital based on the volume of tokens in circulation.
The potential global widespread adoption of central bank digital currencies (CBDC) may negatively impact Circle's long-term prospects.
