On Thursday, Morgan Stanley adjusted its outlook on Charles Schwab Corp. (NYSE: SCHW), reducing the stock's price target from $71.00 to $70.00, while retaining an Equalweight rating. This revision follows the release of Charles Schwab's monthly metrics and second-quarter financial results for 2024.
The firm's analysis led to a decrease in the third-quarter earnings per share (EPS) estimate for 2024 by 13 cents, a 15% reduction, setting the new expectation at 73 cents. The anticipated decline is attributed to a lower net interest margin (NIM) and a decrease in interest-earning assets.
Projections for the company's earnings in 2024 and 2025 have also been revised downward. The estimated EPS for 2024 has been reduced by 7% to $3.05, and the 2025 EPS forecast has been cut by 10% to $3.53. The adjustments reflect expectations of reduced interest income for Charles Schwab.
Despite the lowered earnings forecasts and price target, the price target of $70.00 is based on a 15-times discounted price-to-earnings (PE) multiple for 2026, which remains unchanged from prior evaluations. Morgan Stanley's stance on Charles Schwab continues to be Equalweight, indicating a neutral view on the stock's anticipated market performance.
In other recent news, The Charles Schwab Corporation (NYSE:SCHW) reported substantial growth in its July 2024 Monthly Activity Report. The firm noted a significant increase in client assets, new accounts, and net new assets, with total client assets reaching $9.57 trillion at the end of July.
The number of new brokerage accounts opened in July was 327 thousand. However, Piper Sandler downgraded Charles Schwab's stock from Overweight to Neutral and reduced the shares target to $64.
The company also experienced temporary outages on its trading platform due to high trading volumes and a technical issue with a key vendor. Charles Schwab has appointed Michael Verdeschi as its new Chief Financial Officer, marking a significant transition in the company's financial leadership.
The company's Board of Directors declared a quarterly cash dividend of $0.25 per common share and dividends on several series of preferred stock.
BofA Securities adjusted its outlook on Charles Schwab, reducing the stock's price target to $66. These are recent developments that have impacted Charles Schwab, a significant player in the financial services sector.
InvestingPro Insights
With the recent adjustments in Charles Schwab Corp.'s (NYSE: SCHW) outlook by Morgan Stanley, investors may seek additional perspectives to inform their decisions. According to real-time data from InvestingPro, Charles Schwab has a market capitalization of $119.13 billion and a Price/Earnings (P/E) ratio of 26.91, which adjusts to 24.27 based on the last twelve months as of Q2 2024. Despite a revenue decline of 11.15% in the same period, the company has maintained a high gross profit margin of 96.71%.
InvestingPro Tips suggest caution, noting that analysts have recently revised their earnings expectations downwards for the upcoming period and that the stock has underperformed in the past month. However, Charles Schwab has a longstanding history of dividend reliability, having maintained payments for 36 consecutive years. Investors may find solace in the prediction that the company will remain profitable this year, supported by profitability over the last twelve months.
For those considering long-term investment, the current price represents 82.06% of the 52-week high, with an analyst fair value target of $75.50, suggesting potential for upside. For a deeper dive into company analytics, including additional InvestingPro Tips, visit https://www.investing.com/pro/SCHW.
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