Wealth manager Charles Schwab (SCHW) reports Q1 earnings later this week. The stock is down nearly 3% in the year-to-date because of fears over AI adoption and rising costs.
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According to TipRanks’ Options Tool, options traders expect about a 5.11% move in either direction in SCHW stock in reaction to its Q1 results.
What Wall Street Expects
Wall Street expects SCHW to post quarterly earnings of $1.36 per share in its report, which would represent a year-over-year increase of 30.8%. Revenues are expected to be $6.4 billion, up 14.4% from the year-ago quarter.
Will SCHW beat these expectations? As can be seen below, it has a strong recent track record of doing just that.
Key Issues Ahead of Earnings
SCHW is expected to report a rise in trading revenues in Q1 helped by huge market volatility as a result of the Iran war, concerns over inflation and interest rates. Zacks believes that trading revenues will come in at $1.08 billion, up 18.4% on this time last year.
Despite lower interest rates, SCHW is also expected to report higher Net Interest Revenues of $3.19 billion, up 18% from this time last year. However, subdued equity markets during the quarter are tipped to lead to weak growth in asset management and administration fees.
Expenses are also expected to keep rising due to moves such as expanding its branch network.
Analysts remain cautious about SCHW stock. Morgan Stanley analyst Michael Cyprys recently lowered the firm’s price target on Charles Schwab to $135 from $148 and kept an Overweight rating on the shares. He said that better Q1 earnings for brokers and exchanges should modestly beat consensus, but he sees modest forward estimate risk.
Barclays analyst Benjamin Budish, lowered his price target to $117 from $126. He reduced realizations estimates and expects messaging “to be a bit less constructive” this quarter. He finds shares of the alternative asset managers attractive and thinks Q1 “could be a bit of a clearing event.”
Is SCHW a Good Stock to Buy Now?
On TipRanks, SCHW has a Strong Buy consensus based on 11 Buy and 1 Sell ratings. Its highest price target is $135. SCHW stock’s consensus price forecast is $120, implying a 23.01% upside.
