Circle, GMS Stocks See Big Jump Friday Morning – Here’s What Wall Street Analysts Are Saying

While many analysts on Wall Street have raised their price targets on GMS after The Wall Street Journal’s report that Home Depot may have submitted a competing bid against QXO, RBC Capital said the lack of details “raises questions.”

Shares of Circle Internet (CRCL) and GMS Inc. (GMS) surged at the opening bell on Friday. Circle rallied after Seaport Research launched coverage with a bullish note, calling the firm a “top-tier crypto disrupter,” while GMS gained amid speculation of a bidding war between Home Depot (HD) and QXO (QXO).

Circle’s stock surged 7% on Friday morning, extending its rally after the GENIUS Act cleared the Senate earlier this week and led to a 33% gain on Wednesday. 

Seaport gave Circle a ‘Buy’ rating with a price target of $235. It views the second-largest stablecoin issuer as a “top-tier crypto ‘disruptor’ with a sizeable future opportunity.” The firm expects global adoption of Circle’s in-house stablecoin USDC (USDC) to grow on the back of an improving regulatory environment. 

Seaport estimates that the overall stablecoin market valuation will grow from today’s $260 billion to $2 trillion in the long run, leading to annual revenue growth between 25% and 30% for Circle. 

Meanwhile, GMS’ stock surged more than 28% at the opening bell following The Wall Street Journal report that Home Depot has submitted a takeover offer for the company, which puts it at odds with QXO. Home Depot’s stock edged 0.4% higher while QXO’s stock jumped more than 5%. 

QXO said it had submitted an unsolicited proposal to buy GMS for around $5 billion on Wednesday. 

Analysts at Barclays upped their price target on GMS to $95 from $71 with an ‘Equal Weight’ rating. “There are clearly two behemoths making a push to consolidate the building products distribution sector,” it said, adding that the report is only the first public meeting of QXO and Home Depot and “may well not be the last.”

RBC Capital also increased its price target on GMS to $92.20 from $65 with a ‘Sector Perform’ rating, but warned that Home Depot’s bid may be viewed “slightly negatively,” as it would likely create additional gross margin dilution and further prolong the share repurchase pause.

The brokerage noted that The Wall Street Journal’s report did not include an offer price or state when the offer was made, “which raises the question around whether this is a real or current offer.” However, analysts at RBC Capital also said they “would not be shocked” if Home Depot were genuinely interested in buying GMS.

Truist raised its price target on GMS to $105 from $80 with a ‘Hold’ rating on the shares, while Raymond James increased its price target to $90, up from $80, with an ‘Outperform’ rating.

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