- JPMorgan analyst Kenneth Worthington upgrades Charles Schwab (NYSE:SCHW) to Overweight from Not Rated as the company can leverage structural changes or secular trends to fuel earnings growth for years to come.
- As a leader in retail brokerage, Worthington sees SCHW "benefiting from the surge in retail trading, which we expect will seed future Schwab investing clients."
- Also expects SCHW to more aggressively monetize its third party managers as the company continues to add financial products/services for its retail/advisory clients, allowing it to gain more of the manufacturing margin, adding an incremental ~$2B of revenue.
- "Higher interest rates could contribute ~$4.4B of revenue at the current balance sheet and cost synergies from Ameritrade could limit expense growth as revenue rebounds," he writes.
- Worthington's Overweight rating contrasts with the Neutral Quant rating, which gives Schwab a poor mark for value; it comes in line with the Bullish average Sell-Side rating (7 Very Bullish, 3 Bullish, 8 Neutral, 1 Bearish).
- Stock check: SCHW has climbed 73% in the past year, less than Morgan Stanley's 90% rally, but more than Interactive Brokers' 48% increase as seen in chart below.
- SA contributor Brian Gilmartin explains why he sees Schwab's operating margin returning to mid-40% range in the next few years.
Schwab gets Overweight rating at JPMorgan on levers for growth
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About SCHW Stock
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| Symbol | Last Price | % Chg |
|---|---|---|
| SCHW | - | - |
| The Charles Schwab Corporation | ||