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Investing.com - Mizuho has reduced its price target on Circle Internet Group (NYSE:CRCL) to $70.00 from $84.00 while maintaining an Underperform rating on the stock. The new target represents a significant downside from CRCL’s current price of $82.34, though InvestingPro data shows the stock has already fallen sharply, with a 20.17% decline over the past week.
The price target reduction follows Mizuho’s analysis of over 750 IPOs across a 20-year period, which revealed concerning patterns for stocks like CRCL that outperformed market indexes before their lockup expiration. Despite Mizuho’s bearish outlook, InvestingPro indicates the stock may be slightly undervalued based on its Fair Value assessment.
According to the research, 58% of companies that outperformed the index pre-lockup underperformed the S&P 500 within 180 days post-lockup by an average of 2%, suggesting elevated lockup expiration risk for Circle.
The firm expressed skepticism about Circle’s FY27 consensus revenue expectations, noting that companies in their study that missed revenue projections one year after IPO underperformed the market index by an average of 10%.
Mizuho identified several headwinds facing Circle, including slowing rates, stablecoin commodification, and rising distribution costs, while noting that their medium-term revenue estimates increased slightly due to higher rate expectations compared to their previous model.
In other recent news, Circle Internet Group reported strong third-quarter earnings, with revenue of $740 million and an adjusted EBITDA of $166 million, surpassing analyst expectations by 5% and 26%, respectively. Despite these results, Circle’s stock faced a 10% decline, attributed to concerns over potential rate cuts. Analyst firm Baird upgraded Circle’s stock rating from Neutral to Outperform, setting a price target of $110.00, citing long-term potential despite past underperformance. Meanwhile, Needham maintained a Buy rating but lowered its price target to $190.00, following the company’s third-quarter results that exceeded expectations. Circle’s USDC stablecoin circulation saw a 108% year-over-year growth, outpacing the broader market. Baird also lowered its price target to $110.00 from $144.00 due to cost concerns, while maintaining a Neutral rating. Mizuho expressed concerns about Circle’s fiscal year 2025 guidance, despite describing the third-quarter results as "solid." Bernstein continues to rate Circle as Outperform, even amid recent stock price challenges.
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