Why stablecoin play Circle's stock is still a buy even after a sixfold rally

By Steve GelsiSeaport analyst projects stablecoin market cap roughly doubling in 18 months to $500 billion, and could reach $2 trillion over the long termCircle Internet Group Inc.'s stock still has room to run because of its role as a top-tier "crypto disruptor," even after a more than sixfold gain since the stablecoin issuer went public, an analyst said Friday.Seaport Research Partners analyst Jeff Cantwell initiated coverage of Circle Internet with a buy rating and a price target of $235 a share, about 18% above the stock's closing level of $199.59 a share on Wednesday.The stock has risen like a hockey stick since Circle Internet went public on June 5, with its initial public offering pricing at $31 a share.The stock got another boost earlier this week after the U.S. Senate passed its version of the Genius Act, which sets up a regulatory structure for stablecoins. The measure is now being taken up in the House.Circle Internet's stock (CRCL) surged another 19% to $237.60 a share on Friday, after running up 33.8% on Wednesday on the Senate vote.Even after closing 544% above the IPO price on Wednesday, Circle Internet's stock is still a buy because of an expected explosion in stablecoins, starting with cross-border transactions by financial institutions, Cantwell said.He said the market capitalization of stablecoins will effectively double in 18 months, to $500 billion at the end of 2026 from the current market cap of roughly $260 billion. And that's just the beginning."We see the stablecoin 'market cap' potentially reaching $2 trillion over the longer-term, from roughly $260 billion today," Cantwell said. "As this occurs, we see Circle generating annual revenue growth of 25%-30% ...with ability to drive operating leverage as it scales further."The growth is expected to come as the company's Circle Payments Network (CPN), a product that helps financial institutions make real-time payments such as cross-border transactions."This looks like it potentially can be a disruptive service in areas like supplier payments, remittances, and even payroll," Cantwell said. "We expect CPN's eventual emergence to add to Circle's existing momentum it already has with USDC, and will help drive further growth in Circle."The stock is likely to outperform other financial-technology stocks, he said.This has already been the case, at least in terms of stock-price performance.The gain in Circle Financial's stock since its IPO on June 5 has outperformed other fintech IPOs by a wide margin. Crypto brokerage eToro Group Ltd.'s stock (ETOR) closed Wednesday 21.9% above its IPO price, and shares of mobile bank platform manager Chime Financial Inc. (CHYM) closed Wednesday 17.2% above its IPO price.Meanwhile, Coinbase Global Inc.'s stock (COIN) has rallied 16% in the past month and shares of brokerage Robinhood Market Inc. (HOOD) have advanced 19.4% over the same period.-Steve GelsiThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.