Ticonderoga Maintains a 'Neutral' on Charles Schwab (SCHW); Acquiring optionsXpress
Tweet
Share
E-mailGet Alerts SCHW Hot Sheet
Price: $111.09 +1.23%
Rating Summary:
22 Buy, 9 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
22 Buy, 9 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Join SI Premium – FREE
Ticonderoga maintains a 'Neutral' on Charles Schwab Corp. (NYSE: SCHW).
Ticonderoga analyst says, "SCHW Buying optionsXpress. SCHW is issuing 60 million shares to acquire optionsXpress (Nasdaq: OXPS)(NotRated) for an implied deal value of $1 billion. Excluding $55 million in restructuring, SCHW estimated the deal could be modestly accretive ($80 million pre-tax or about $0.04 per year). This represents just under 5% of SCHW's share count."
"The transaction will help to fill an options gap at SCHW. Options DARTs will increase 66% based off Q4 numbers. Trading revenue will increase to 21% of run rate revenue from 18% of revenue. We suspect the bulk of the $60 million of revenue synergies will come from sweeping OXPS client cash into SCHW bank. While this further augments SCHW's rate sensitivity, it will require more capital usage in the bank. Management indicated the transaction was done with stock to better support leverage ratios."
It helps the product offering but is not material near-term. Upside in this stock will come when rates increase. This deal increases the sensitivity but also increases the risk if rates stay low for longer."
For more ratings news on Charles Schwab Corp. click here and for the rating history of Charles Schwab Corp. click here.
Shares of Charles Schwab Corp. closed at $17.56 yesterday.
Ticonderoga analyst says, "SCHW Buying optionsXpress. SCHW is issuing 60 million shares to acquire optionsXpress (Nasdaq: OXPS)(NotRated) for an implied deal value of $1 billion. Excluding $55 million in restructuring, SCHW estimated the deal could be modestly accretive ($80 million pre-tax or about $0.04 per year). This represents just under 5% of SCHW's share count."
"The transaction will help to fill an options gap at SCHW. Options DARTs will increase 66% based off Q4 numbers. Trading revenue will increase to 21% of run rate revenue from 18% of revenue. We suspect the bulk of the $60 million of revenue synergies will come from sweeping OXPS client cash into SCHW bank. While this further augments SCHW's rate sensitivity, it will require more capital usage in the bank. Management indicated the transaction was done with stock to better support leverage ratios."
It helps the product offering but is not material near-term. Upside in this stock will come when rates increase. This deal increases the sensitivity but also increases the risk if rates stay low for longer."
For more ratings news on Charles Schwab Corp. click here and for the rating history of Charles Schwab Corp. click here.
Shares of Charles Schwab Corp. closed at $17.56 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Fiserv (FISV) PT Lowered to $60 at Freedom Broker
- Jefferies on Five Below (FIVE): 'Our latest channel checks reinforce our view that FIVE's momentum extends well beyond viral Squish trends'
- UBS Reiterates Buy Rating on HF Sinclair (DINO)
Create E-mail Alert Related Categories
Analyst CommentsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
