On Wednesday, Jefferies updated its outlook on Charles Schwab Corp. (NYSE: NYSE:SCHW) shares, raising the price target to $84 from the previous $73, while maintaining a Buy rating on the stock. The adjustment follows Charles Schwab's third-quarter results for 2024, leading to a slight alteration in earnings per share (EPS) estimates for the fourth quarter of 2024 and the full year 2025. The new EPS forecasts are set at $0.87 for the fourth quarter, up from $0.82, and at $3.80 for 2025, slightly down from $3.85.
The firm noted the significant increase in deposits during September, which saw an influx of $17 billion. This surge was highlighted as a positive sign for the company, particularly as it included no non-repeatable items, suggesting the potential for sustained growth. The analyst pointed out that such a robust increase in deposits might not be sustainable over the long term, but it still reflects a strong performance.
Organic growth at Charles Schwab has shown signs of acceleration, with an annualized increase of 3.9% in the third quarter of 2024. This pace is edging closer to the company's long-term target of 5-7% growth. The firm's ability to attract and retain client assets appears to be improving, which is a positive indicator for its future business prospects.
The update from Jefferies comes after a detailed analysis of Charles Schwab's recent financial performance and growth trajectory. The raised price target and sustained Buy rating suggest a confidence in the company's strategy and its ability to capitalize on market opportunities.
Investors and market watchers often look to such updates from financial analysts to gauge the performance and potential of publicly traded companies. With the new price target and positive outlook from Jefferies, Charles Schwab's stock may draw increased attention from the investment community.
In other recent news, Charles Schwab Corporation reported a strong third quarter for 2024, demonstrating a 5% year-over-year increase in revenue to $4.8 billion and adjusted earnings per share of $0.77. The company successfully reduced its supplemental funding by $9 billion, improving the adjusted Tier 1 Leverage ratio to 6.7%. Net new assets more than doubled compared to the same quarter last year, indicating robust client engagement.
Financial institutions Goldman Sachs, Citi, and Barclays have maintained their neutral stance on Charles Schwab, with Goldman Sachs holding a $74 target, Citi raising the target to $75 from $72, and Barclays increasing it to $74 from $64. These adjustments are based on the company's recent financial performance and strategic advancements.
Charles Schwab anticipates a 2-3% revenue growth for the entirety of 2024 and plans to introduce new retail alternatives in the fourth quarter. However, due to potential macroeconomic uncertainties, the company has adjusted its net interest margin expectations for the end of 2025.
Lastly, a leadership transition is underway, with CEO Walt Bettinger set to depart and Rick Wurster to assume the role in January 2024. These are the recent developments for Charles Schwab Corporation.
InvestingPro Insights
Charles Schwab's recent performance aligns with several key insights from InvestingPro. The company's stock has shown significant momentum, with InvestingPro data revealing a 7.89% return over the last week and a robust 12.98% return over the past month. This upward trend supports Jefferies' bullish stance and increased price target.
InvestingPro Tips highlight that Charles Schwab has maintained dividend payments for 36 consecutive years, demonstrating financial stability and commitment to shareholder returns. This consistency is particularly noteworthy given the recent deposit growth and organic growth acceleration mentioned in the article.
Moreover, InvestingPro data shows a P/E ratio of 29.95, which, when considered alongside the company's growth prospects and deposit influx, may indicate potential for further value creation. The market cap of $131.64 billion underscores Schwab's significant position in the financial services industry.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Charles Schwab, providing deeper insights into the company's financial health and market position.
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