On Tuesday, Raymond (NSE:RYMD) James reaffirmed its positive stance on shares of Charles Schwab Corporation (NYSE:SCHW), maintaining an Outperform rating and a price target of $86.00. The financial services company's fourth-quarter performance was highlighted by improvements in several key areas, contributing to results that exceeded expectations.
According to InvestingPro data, 16 analysts have recently revised their earnings estimates upward, with price targets ranging from $68 to $98.
Charles Schwab's fourth-quarter earnings were bolstered by an increase in net interest income (NII) and higher trading revenues, which led to total revenue surpassing analyst forecasts. This marked the first uptick in NII since early 2023, driven by sequential improvements in the net interest margin (NIM) and interest-earning assets.
The company maintains an impressive 96.78% gross profit margin and has demonstrated consistent profitability, with $18.74 billion in revenue over the last twelve months.
The company's banking division, Schwab Bank, also demonstrated positive momentum with deposit levels showing sequential growth, which accelerated as the year came to a close. This growth in deposits is seen as a positive sign for the bank's financial health and ability to generate revenue from interest-earning assets. InvestingPro's analysis indicates a "GOOD" overall financial health score, though it notes that short-term obligations exceed liquid assets.
In addition to the financial metrics, Charles Schwab reported an uptick in client engagement. The firm saw continued sequential improvement in client net new asset gathering and recorded the highest number of net new accounts in a quarter since the fourth quarter of 2021.
The analyst's comments underscored the healthy state of Charles Schwab's business at the end of 2024, as the company appears to have successfully navigated the challenges of the financial market. With the reaffirmation of the Outperform rating and the $86.00 price target, Raymond James signals its confidence in Charles Schwab's ability to sustain its positive trajectory.
In other recent news, Charles Schwab Corporation has been making noteworthy strides in its financial performance. The company's management team has forecasted a revenue increase of 13-15% for the year 2025, translating to approximately $22.3-22.4 billion.
This projection is slightly above consensus estimates and around 1% higher than the figures anticipated by Visible Alpha. This growth is expected to build on Schwab's current revenue base of $18.74 billion.
In the realm of analyst ratings, several firms have expressed positive outlooks for Charles Schwab. Truist Securities maintains a Buy rating on the company, emphasizing its strong revenue growth potential. Similarly, Raymond James has raised the company's price target to $86, expecting robust EPS growth in 2025 and 2026. Barclays (LON:BARC) upgraded the company's stock from Equal Weight to Overweight, raising the price target to $95.
In terms of mergers and acquisitions, Toronto-Dominion Bank (TSX:TD), Charles Schwab's largest shareholder, is reviewing its 10% stake in the company following a U.S. money-laundering scandal. Regardless of the outcome of this review, the bank's agreement with Schwab regarding sweep-deposit accounts for clients will continue.
Lastly, the company reported significant growth in client assets, totaling $10.31 trillion at the end of November. This increase was driven by core net new assets from new and existing clients reaching $28.8 billion. These are among the recent developments that showcase Charles Schwab's financial progress and potential.
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