Circle Internet stock climbs on TD Cowen upgrade, Fed rate hike

Circle Internet Group shares rose 6.5% in morning trading Friday, following a price target increase from TD Cowen and developments in monetary policy and regulation.

TD Cowen analyst Bryan Bergin raised his price target on the stock to $92 from $87 while keeping a Buy rating. Bergin pointed to three factors supporting his view: the launch of the Arc blockchain mainnet, the Federal Reserve's 25-basis-point interest rate increase to a range of 3.75% to 4.00%, and the Senate's failure to advance the CLARITY Act.

The Fed rate increase directly affects Circle's earnings because the company generates income from Treasury and cash assets that back its USDC stablecoin. Higher short-term rates increase the revenue Circle earns from these reserves.

Bergin said the recent stock decline, which followed the CLARITY Act's failure to pass a procedural Senate vote and an earlier earnings miss, was excessive. He noted that regulatory progress through agencies and institutional adoption of stablecoins continue even without the legislative framework, and that Arc provides Circle with a way to expand revenue beyond its reserve-income business.

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