As bad as it sounds for brokerage firm Charles Schwab (NYSE:SCHW) to note that it’s seeing less money come in, the good news is that this was actually expected. At least, that’s what Schwab wanted to make clear, as its stock fell over 3% in Monday afternoon’s trading.
Charles Schwab, based on word from chief financial officer Peter Crawford, was expecting a certain amount of inflow reduction thanks to TD Ameritrade’s upcoming shift to Schwab in just a couple weeks. Schwab expected some attrition to come from this, and indeed, it’s happening. However, the newest reports say that the rate of client attrition involved is either in line with expectations, or is actually slightly better than expected. Further, the whole matter should no longer be an issue starting in 2024.
So either it’s the beginning of the end or a tempest in a teapot as a few changes are made. While only time will tell just which it turns out to be, there’s another point that suggests something larger may be at work here. Schwab’s chief analyst, Liz Ann Sonders, recently had some comments that suggest larger upheavals in the broader market may be at work. “We’re not out of the woods yet,” Sonders noted, pointing to several potential risk factors in the market ahead. These included ongoing rate increases at the Fed and stock valuations that may still be too high for their own good.
Analysts, meanwhile, are mostly sure that Schwab can hold out. With 12 Buy ratings, two Hold and one Sell, Charles Schwab stock is considered a Moderate Buy by analyst consensus. Further, Charles Schwab stock comes with a 19.05% upside potential thanks to its average price target of $73.87.
