Charles Schwab selloff overdone, says Morgan Stanley

Morgan Stanley analyst Michael Cyprys notes that Charles Schwab shares were down 13% intraday on Thursday following "what appears to be" an 8.5M block sale, which would amount to about $620M proceeds assuming yesterday’s close, as well as cash sorting/deposit withdrawal concerns that the firm believes may have pressured another financial institution to raise funding and capital. However, the firm believes yesterday’s price action was "a knee-jerk reaction that compounds on long-simmering concerns about cash sorting" and was overdone. The firm, which argues that the sharp selloff presents a "compelling entry point for a high quality franchise that should be able to better navigate liquidity risks than the market prices in," keeps an Overweight rating and $99 price target on Charles Schwab shares.