U.S. banks have been under a lot of pressure lately but a JPMorgan analyst is still convinced that investing in Charles Schwab Corporation (NYSE: SCHW) at current levels positions you for lucrative returns.
Charles Schwab stock could climb to $85
Kenneth Worthington reiterated the financial service company at “overweight” this week. His $85 price target suggests about a 60% upside from here.
The bullish call on Charles Schwab stock arrives only days after it reported better-than-expected earnings for its first financial quarter with review printing in line with Street estimates (source).
Last month, the Westlake-headquartered firm had reiterated it was sound in terms of liquidity and wasn’t struggling with the same challenges that ultimately led to the failure of the Silicon Valley Bank.
“SCHW” is currently down close to 35% for the year.
Charles Schwab has the option to de-bank
Even if push comes to shove, Worthington said in his research note, Charles Schwab retains the option to pull out of banking services that would warrant a higher multiple for this financial stock.
Schwab could theoretically de-bank, and return to operating the way it did historically, which was a focus on sweeping cash into money market funds and earnings an elevated management fee rather than an even larger spread.
It would be the last resort for Schwab, though, that would ideally try to avoid winding down since it could result in a massive hit to earnings, the analyst concluded.
Charles Schwab stock currently pays a dividend yield of 1.86% that makes up for an additional reason to own it.
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