Charles Schwab Analyst Is ‘Cautiously Optimistic’ Uptrend May Continue in Q4 – Charles Schwab (NYSE:SCHW)

Charles Schwab Corporation SW reported better-than-expected third-quarter results on Tuesday, and analysts agree.

The details: Charles Schwab reported a 5% increase in revenue to $4.85 billion, with daily average customer trades increasing 9% year-over-year.

JPMorgan analyst Kenneth Worthington referred to Schwab as a leading retail financial services brand and said its large and engaged base of retail investors should continue to drive the company’s growth. JP Morgan maintained its “Overweight” rating on Schwab shares and increased its price target to $87 from $86.

Cash Sweep Balance: Worthington noted that Schwab’s transaction cash sweep balances saw a significant increase in September and expects average income assets and average transaction-based cash balances to be flat to higher in the fourth quarter.

Analysts at Piper Sandler also highlighted Schwab’s $17.2 billion increase in transaction cash holdings in September as the largest monthly increase since the Fed began raising interest rates in early 2022.

Piper Sandler’s Patrick Moley maintained a neutral rating on the stock, but raised its price target from $64 to $65 as it remains “cautiously optimistic that this trend can continue in a directional manner in the coming quarters.”

See also: Amazon analyst expects Q3 results with sales growth, margin expansion and relatively stable e-commerce demand

Goldman Sachs analyst Alexander Blostein was less optimistic and expects cash sweep holdings to decline in October. Among Schwab’s potential downside risks, Blostein sees faster-than-expected core deposit outflows, Ameritrade-related fluctuations and lower retail activity. Goldman Sachs maintained a Neutral rating but raised its price target on Charles Schwab shares from $67 to $74.

“Although sweep balances will likely decline in October, we are encouraged by signs of further stabilization in sweep deposits, which should be well received by investors,” Blostein wrote.

JMP Securities analyst Devin Ryan warned that cash trends in customer transactions “may be erratic from month to month.” However, Charles Schwab’s recent results are evidence of “stabilizing to changing cash trends.” This is a key concern for investors.

JMP Securities maintained a “Market Outperform” rating on Charles Schwab and increased its price target to $84 from $82.

Price promotion: According to Benzinga Pro, shares of Charles Schwab were up 0.96% at $72.65 at the time of publication on Wednesday.

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