JPMorgan, an influential American investment bank, has initiated coverage of Circle (CRCL) stock with an 'underweight' rating and a price target of $80 by December 2026.
JPMorgan analysts led by Kenneth Worthington presented the first official analysis of Circle stock in a report titled 'North American Equity Research,' seen by Cointelegraph.
The forecast, reduced by 55% from the current CRCL price of $180, is based on a 45-times multiple of projected 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 looks promising while maintaining its current market positions, JPMorgan analysts believe that the company's current market capitalization is inflated.
The expected market capitalization by December 2026 is $21 billion. The report noted that the midpoint of the IPO was valued at $31 or a market capitalization of $8 billion.
JPMorgan analysts mentioned that competitive pressure could affect the company's value in the coming months, including threats from external competition.
They noted the risk that some companies may capture a significant market share due to lower switching costs and utilize 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 (CBDCs) could negatively impact Circle's long-term prospects.
