By Charles Schwab Corporation (NYSE: SCHW) has already rallied more than 10% this year – but a Wells Fargo analyst says investors haven’t entirely missed the opportunity in this financial services giant.
Michael Brown expects the multinational to hit $93 in the coming months after coming in ahead of Street estimates in its fourth financial quarter this week.
“Our call on SCHW had been that the bull/bear debate would keep shares range bound. Following a solid print and call, the bear case is weaker, and we expect the bull case to prevail,” he told clients in a note today.
Charles Schwab stock currently pays a dividend yield of 1.24% that makes it all the more attractive to own for income investors.
Charles Schwab stock to benefit from buybacks
Charles Schwab attributed the strength in its recently concluded quarter partly to record net inflows and the TD Ameritrade integration.
The New York listed firm also signalled plans of resuming stock buybacks this year that help its share price climb further in 2025, according to Wells Fargo’s Michael Brown.
In 2025, we see continued net interest margin and operating margin expansion, continued balance sheet and capital improvements with return of buybacks, and better organic growth.
Note that Brown’s $93 price target on Charles Schwab sits just below the stock’s all-time high of $95 in January 2022.
Schwab to venture into spot crypto trading
The Wells Fargo analyst is positive on Charles Schwab shares also because the company’s management expects continued growth in net new assets.
Eventually, it expects the growth rate to stand between 5.0% and 7.0%.
“Asset side to benefit from loan demand and securities repricing benefits in 2H25,” Michael Brown argued in a report on Wednesday.
Schwab is currently awaiting regulatory approvals to expand its offering to spot crypto trading.
The move may also unlock significant upside in its stock price in 2025 since the crypto market is broadly expected to remain hot under Trump 2.0.
The US President has already vowed to make America the crypto capital of the world.
Is Charles Schwab a cheap stock?
Wells Fargo analyst is not alone in seeing further upside in Charles Schwab stock.
Truist analyst David Smith also maintained his “buy” rating on shares of the financial services firm after its chief executive said “clients continue to do more and more with us … they engaged strongly in our trading, wealth, and lending solutions” on the earnings call.
Charles Schwab reported $5.53 billion in revenue on 94 cents a share of earnings for the fourth quarter last night.
Analysts, in comparison, were at $5.2 billion and 91 cents per share, respectively.
However, investors should know that SCHW shares are not particularly inexpensive to own at about 30 times earnings versus their historical average.
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