The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.

Circle Internet Group, Inc. (NYSE:CRCL) is one of the best Ethereum stocks to buy now. On April 8, Compass Point analyst Ed Engel downgraded Circle Internet Group, Inc. (NYSE:CRCL) to Sell from Neutral and lowered his price target to $77 from $79. Engel cited growing concerns that Circle’s margin outlook is deteriorating despite strong USDC supply growth.

nick-chong-0bO235Rhqec-unsplash

According to Engel, just under 80% of USDC supply growth since early February has been driven by partner platforms such as Sky, Binance, and Ethena. These are channels that carry lower margins because Circle must share interest income from its USDC reserves with these distribution partners, the analyst noted. He added that Circle earns higher margins on USDC held outside these partnership networks. Put simply, the current growth trend is actually diluting profitability even as overall USDC adoption expands.

The analyst also touched on Circle’s earnings, where he noted that the company’s Q1 2026 results could underwhelm rising expectations. Engel also stated that his firm expects Circle’s gross margins to remain under pressure if current trends persist. The firm estimates EBITDA will fall 19% quarter-on-quarter in Q1 2026, and its full-year 2027 EBITDA forecast sits 20% below Wall Street consensus.

Part of what makes the stock vulnerable, in Engel’s view, is its high valuation. He noted that Circle currently trades at 40 times optimistic 2027 EBITDA forecasts that assume USDC will reaccelerate in Q2 2026. The analyst is not counting on this scenario.

Circle indicated it is solidifying its place in the Ethereum ecosystem when it launched cirBTC on April 2. cirBTC is a Bitcoin-backed token specifically designed for institutional decentralized finance, or DeFi, use. The product targets custody and trust concerns around existing wrapped Bitcoin solutions, and it is set to launch on Ethereum and Circle’s Arc blockchain first. The token offers real-time reserve verification on Ethereum, and positions Circle as a direct competitor to Coinbase, BitGo, and other Bitcoin token providers in the Ethereum DeFi space.

Circle Internet Group, Inc. (NYSE:CRCL) is a financial technology company focused on blockchain-based payments and digital currency infrastructure. The company issues USD Coin (USDC), a stablecoin that is widely circulated on the Ethereum blockchain, where it is used for trading, DeFi, and smart contract applications.

While we acknowledge the potential of CRCL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 10 Best Defense Stocks That Will Skyrocket and Top 10 Utility Stocks to Buy Now.

Disclosure: None. Follow Insider Monkey on Google News.