Charles Schwab Q1 Earnings Surpass Expectations, Prompting Analysts To Maintain Positive Outlook

Shares of Charles Schwab Corporation SCHW were rising on Tuesday, after the company reported better-than-expected revenues and earnings for its first quarter.

Keefe, Bruyette & Woods On Charles Schwab

Analyst Kyle Voigt maintained an Outperform rating and price target of $65.

“SCHW reported a penny beat to our non-GAAP EPS estimate (and +$0.03 beat to consensus),” Voigt wrote in a note. “The beat to KBWe was primarily driven by lower expenses (+$0.01) and a lower preferred dividend (+$0.03), partially offset by lower revenues (-$0.02) and a higher tax expense (- $0.01),” he added.

The analyst reduced the non-GAAP earnings estimates for 2023 and 2024 from $3.30 to $3.16 per share and from $3.90 to $3.89 per share, respectively, “mainly to reflect lower NII estimates in 2023,” which he believes is “mostly temporary.”

William Blair On Charles Schwab

Analyst Jeff Schmitt reiterated an Outperform rating on the stock.

“The highlight in the quarter was that cash sorting has been decelerating the last few months as we approach peak interest rates,” Schmitt said in a note. “While it remains a material headwind in the near term, we expect it to abate by the third quarter, after which EPS growth should reaccelerate as deposits expand, funding costs decline, and net yields rise,” he added.

“Strong organic growth, Ameritrade cost synergies, and higher share buybacks should add to the upward bias,” the analyst further stated.

Check out other analyst stock ratings.

JMP Securities On Charles Schwab

Analyst Devin Ryan reaffirmed a Market Perform rating on the stock.

Charles Schwab’s core results were broadly in-line with expectations, Ryan said. He added that the core business had performed “quite well during the quarter” and the second quarter “has started on a similar note.”

While the near-term remains challenging, the company is “starting to see light at the end of the tunnel,” the analyst wrote. The long-term franchise “remains in good shape, including generally positive core business trends during the quarter despite the March stress,” he added.

Credit Suisse On Charles Schwab

Analyst Bill Katz maintained an Outperform rating, while raising the price target from $65.50 to $66.50.

“We now expect SCHW to borrow an additional ~$30B through 3Q23 vs. ~$35B previously,” Katz said in a note. “On client cash sorting, we slightly raise our April 2023 deposit-related outflows to account for seasonal tax payments but continue to expect sorting processes to abate by 4Q23,” he added.

“On expenses, we raise our regulatory expense outlook even further for 2023-25, but continue to expect overall adjusted expense growth of ~7%, ~6%, and ~5.5% Y/Y in 2023-25E, respectively,” the analyst further wrote.

SCHW Price Action: Shares of Charles Schwab were up 2.16% to $53.93 at the time of publishing Tuesday.

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Photo: Mike Mozart on flickr