On Tuesday, Deutsche Bank updated its outlook on Charles Schwab Corp (NYSE:SCHW), raising the stock's price target to $77 from the previous $75, while maintaining a Buy rating. The adjustment follows a review of the company's February metrics and discussions with its investor relations team.
The firm revised its first-quarter earnings per share (EPS) estimate for Charles Schwab to $0.72, down from $0.75, which sits below the consensus estimate of $0.76. This change was influenced by the management's guidance for the first quarter, suggesting an EPS of approximately $0.72.
The February metrics report had shown positive trends in client asset organic growth and client deposit formation, but it also pointed to potential volatility in the company's earnings revision path in the near term.
In addition to the first-quarter adjustments, Deutsche Bank also lowered its 2024 EPS estimate for Charles Schwab to $3.24 from $3.33. This revision is mainly due to slightly lower net interest income forecasts stemming from a reduced earning asset forecast, along with more conservative trading revenue capture rates.
Despite the near-term adjustments, Deutsche Bank has slightly increased its EPS estimates for 2025 and 2026. The firm anticipates a faster paydown of high-cost borrowing and other minor changes to contribute to this growth. The bank's long-term outlook for Charles Schwab remains optimistic, with expectations of an EPS growth of over 40% in 2025 to record levels, and over 30% in 2026, as the company continues to reduce high-cost borrowing.
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