Stablecoin issuer Circle Internet Group (CRCL) is trading a few percentage points lower on Monday morning after suffering a ratings downgrade by investment bank Morgan Stanley (MS).

For Circle, Morgan Stanley analyst James Faucette took the stock down to “Underweight” (sell-equivalent) from “Equal Weight” (hold-equivalent). Faucette also took his target price all the way down to $38 from $106. Faucette’s team wrote that USD coin contraction exposes the company’s reserve income sensitivity and points toward potentially reduced margins.

Additionally, Morgan Stanley cut the firm’s USDC assumptions by 33% in 2027 as well as by 44% for 2028. This drove earnings estimates for Circle 3% and 20% below consensus,…