Charles Schwab’s Strong Asset Growth and Cost Reduction Justify Buy Rating

Analyst Michael Cyprys from Morgan Stanley maintained a Buy rating on Charles Schwab (SCHW – Research Report) and keeping the price target at $83.00.

Michael Cyprys has given his Buy rating due to a combination of factors including Charles Schwab’s notable increase in total client assets and net new asset inflows, which indicate strong client engagement and asset growth. The firm reported a 4.6% month-over-month increase in total client assets, reaching $10.3 trillion, with net new asset inflows of $33.6 billion, reflecting a 4.1% annualized growth rate. This positive momentum is further supported by the firm’s successful efforts in reducing high-cost funding, as evidenced by a significant decrease in CDs and overall high-cost funding at the bank.
Additionally, despite a deceleration in new account growth and softer total trades, the firm’s performance in net new accounts and daily average trades exceeded expectations. The reduction in high-cost funding and the increase in margin balances, which are highly accretive to net interest margin, also contribute to the positive outlook. These factors collectively suggest a robust financial position and potential for continued growth, justifying the Buy rating.

According to TipRanks, Cyprys is a 4-star analyst with an average return of 4.1% and a 52.26% success rate. Cyprys covers the Financial sector, focusing on stocks such as BlackRock, LPL Financial, and Marketaxess Holdings.

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