As Bulls Gain Momentum, Charles Schwab Gets an Upgrade From Wells Fargo

Wells Fargo believes the bulls are gaining momentum for Charles Schwab, positioning the stock for potential growth, as the firm upgrades its rating.

‍

Analyst Michael Brown raised Charles Schwab’s rating from equal weight to overweight and increased his price target from $89 to $93. This new target suggests an upside of nearly 15% from its current price levels.

‍

The upgrade follows the brokerage’s release of fourth-quarter earnings, which exceeded analyst expectations. As a result, Charles Schwab’s stock rose by almost 6%.

‍

In his report, Brown acknowledged that previously, the stock’s performance had been largely constrained by the ongoing debate between the bulls and bears. However, following a strong earnings report and positive outlook, Brown believes the bear case has weakened, and he expects the bullish momentum to take over.

‍

For 2025, Brown predicts continued growth in net interest margins and operational margins, as well as improvements in the company’s balance sheet and capital position, with share buybacks potentially returning. He also forecasts stronger organic growth.

‍

Charles Schwab’s management has expressed optimism about its growth prospects for 2025. They expect net new assets to continue growing this year and eventually return to the 5% to 7% range.

‍

Brown also expects the company’s balance sheet recovery to persist, with loan demand and securities repricing offering benefits in the second half of 2025. A notable development is that after an eight-quarter hiatus, share buybacks could resume by mid-2025 and potentially ramp up sharply.

‍

Over the past 12 months, Charles Schwab’s stock has gained 27%, outperforming the S&P 500 during the same period.

‍

Overall, analysts are generally optimistic about the stock. Out of the 22 analysts covering Schwab, 14 have given it a buy or strong buy rating, while the remaining eight have assigned hold or underperform ratings, according to data from LSEG.

‍