Tuesday - Truist Securities has initiated coverage on shares of Charles Schwab Corporation (NYSE:SCHW) with a Buy rating and an $85.00 price target. Currently trading at $74.48, InvestingPro analysis suggests the stock is moderately undervalued, aligning with Truist's bullish outlook.
Truist's assessment points to Charles Schwab's strong revenue growth potential, particularly as the financial services company benefits from lower funding costs and the repricing of its securities book at current market levels.
According to Truist, the fading concerns over balance sheet issues and "cash sorting" are paving the way for a clearer narrative that could enhance investor enthusiasm for Schwab's future. The analyst highlighted the company's scale as a competitive advantage and its potential for capital returns that may not be fully appreciated by the market. InvestingPro data reveals nine analysts have revised their earnings upward for the upcoming period, and the company has maintained dividend payments for 36 consecutive years.
Charles Schwab, with a precise market capitalization of $136.34 billion, is recognized as a leading retail broker and is among the largest banks in the United States, boasting $466 billion in assets. The company maintains an impressive gross profit margin of 96.78% and has received a "GOOD" overall Financial Health Score from InvestingPro, which offers comprehensive analysis through its Pro Research Report, available for over 1,400 US stocks. The company also operates an investment management division that offers mutual funds and ETFs.
The services offered by Schwab cater to a diverse clientele. Its Investor Services segment is designed to meet the needs of individual investors and retirement plans, while the Advisor Services segment provides a range of support services to registered investment advisors (RIAs) and related entities, including custodial, trading, and banking services. The company's strong market position is reflected in its revenue of $18.74 billion over the last twelve months.
Truist's positive outlook for Charles Schwab underscores the company's robust position in the financial services sector and its capacity to capitalize on growth opportunities in the coming period.
In other recent news, Charles Schwab Corporation has been the subject of several analyst updates. Raymond (NS:RYMD) James has raised the company's price target to $86, expecting robust EPS growth in 2025 and 2026.
Barclays (LON:BARC) has upgraded the company's stock from Equal Weight to Overweight, raising the price target to $95, reflecting optimism about the company's ability to reduce debt and improve cash balances. Citi has increased its price target to $85, maintaining a neutral stance, while noting improving cash metrics.
In terms of financial performance, Charles Schwab has reported significant growth in client assets, with total assets amounting to $10.31 trillion at the end of November. The company's core net new assets from new and existing clients reached $28.8 billion, a 17% rise from the previous month. The company has also revised its full-year net revenue growth forecast to between 3.0% and 3.5%.
Analysts from TD (TSX:TD) Cowen, JPMorgan (NYSE:JPM), and Keefe, Bruyette & Woods have provided varied responses to the company's recent metrics and revised revenue forecast. Despite these mixed reactions, the company's ability to maintain steady client cash levels and increase net new assets has been noted.
Lastly, a leadership transition is underway at Charles Schwab, with CEO Walt Bettinger set to depart and Rick Wurster to assume the role in January 2024. These recent developments highlight the dynamic nature of Charles Schwab's operations in the financial landscape.
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