On Tuesday, TD Cowen increased its price target for Charles Schwab Corporation (NYSE:SCHW) shares to $92 from the previous target of $87. The firm has sustained its Buy rating on the stock.
The adjustment comes as the analyst anticipates significant growth potential for the company's earnings, driven by a combination of factors, including the peak in client sorting, an uptick in Net New Assets (NNA) growth, and the continued benefits from the synergies of the AMTD/Schwab merger.
The analyst provided insights on the earnings forecast, adjusting the 2024 adjusted earnings per share (EPS) estimate slightly downwards by $0.07 to $3.39. This revision accounts for the balance sheet versus net interest margin dynamics. However, for the years 2025 and 2026, the estimates have been raised by over 7%, to $4.62 and $5.70 respectively. The new 12-month sum-of-the-parts-derived price target of $92 reflects this increased earnings outlook.
The report from TD Cowen indicates that despite the revisions for the years 2025 and 2026, the model remains conservative in key areas. This suggests that there could be further potential upside for Charles Schwab's earnings. The analyst describes the company's earnings as being "coiled like a spring," ready to expand measurably.
The positive outlook is attributed to the ongoing integration and synergy realization following the merger between TD Ameritrade and Charles Schwab. This strategic move is expected to continue to bear fruit, contributing to the company's financial performance and growth trajectory in the coming years.
InvestingPro Insights
In light of TD Cowen's updated price target for Charles Schwab Corporation (NYSE:SCHW), real-time data from InvestingPro provides additional context for investors considering the stock. With a market capitalization of $130.13 billion and a P/E ratio that has adjusted to 24.74 over the last twelve months as of Q4 2023, Schwab's financials warrant attention. The company's Price/Book ratio, standing at 4.1, suggests a premium valuation compared to the book value of its assets.
InvestingPro Tips highlight some cautionary points: analysts have recently revised their earnings expectations downwards for the upcoming period, and the company's short-term obligations currently exceed its liquid assets. However, on a more positive note, Charles Schwab has a strong track record of maintaining dividend payments for 36 consecutive years, underscoring its commitment to shareholder returns. Additionally, the stock has experienced a significant price uptick over the last six months, with a 35.88% total return, and is trading near its 52-week high.
For investors seeking a deeper analysis, there are additional InvestingPro Tips available for Charles Schwab, which can be found at https://www.investing.com/pro/SCHW. To enrich your investment strategy with these insights, use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 5 more tips waiting to guide your investment decisions on InvestingPro.
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