Charles Schwab’s Resilient Growth and Upside Potential Justify Buy Rating

William Blair analyst Jeff Schmitt has maintained their bullish stance on SCHW stock, giving a Buy rating today.

Jeff Schmitt has given his Buy rating due to a combination of factors that highlight Charles Schwab’s robust performance in a challenging market environment. The company has demonstrated impressive top-line growth of 18% and a significant margin expansion of 500 basis points. Additionally, Schwab’s adjusted EPS has grown by over 40% for two consecutive quarters, showcasing its strong financial health.
Schmitt also notes that Schwab’s defensive characteristics, such as benefiting from market volatility through sweep cash and trading activities, contribute to its resilience. The company’s spread income is bolstered by the rapid decline in supplemental funding and the early stages of inflecting sweep cash. Furthermore, Schwab’s organic growth is normalizing, and share buybacks have resumed, supported by a stronger capital position. With a favorable growth outlook projected through 2026 and the stock trading below historical valuation multiples, Schmitt sees substantial upside potential, justifying the Buy rating.

In another report released today, Barclays also maintained a Buy rating on the stock with a $89.00 price target.