Goldman Sachs Downgrades Charles Schwab Corp. (SCHW) to Neutral, Removes from Conviction Buy List Citing Valuation

Goldman Sachs analyst Will Nance downgraded Charles Schwab Corp. (NYSE: SCHW) from Conviction Buy to Neutral with a price target of $76.00.

The analyst comments "We are downgrading SCHW to Neutral from Buy and removing from the Americas Conviction List as the stock has approached our price target, and we no longer see above average upside relative to the rest of our coverage (8% upside vs. 16% on average for our coverage). Since being added to the Americas Buy list on November 30, 2018 and Conviction List on April 5, 2021, SCHW is up 56% and 3% respectively, versus the S&P 500 58% and 7%, respectively. We believe that SCHW's stock has benefited significantly from 1) strong tailwinds from elevated retail trading, 2) significant balance sheet growth from higher customer cash balances in the lower rate environment, 3) strong market returns, and 4) an improving outlook for interest rates (last few days notwithstanding), leading shares to advance 32% YTD and 146% from the 2020 lows. Looking ahead, we see considerable leverage in the model to continue to drive strong net new asset growth, benefit from both revenue and expense synergies from the Ameritrade merger, and also drive significant top line growth through continued organic growth as well as inorganically from the margin upside inherent in the company's significant rate sensitivity. However, shares have continued to grind higher and are nearing our target price of $76; thus, we now see less upside over the next 12 months."

For an analyst ratings summary and ratings history on Charles Schwab Corp. click here. For more ratings news on Charles Schwab Corp. click here.

Shares of Charles Schwab Corp. closed at $70.07 yesterday.

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