De-banked Schwab may be worth considerably more, says JPMorgan

JPMorgan analyst Kenneth Worthington says Charles Schwab could be worth considerably more if it were to de-bank. Investors see a number of risks associated with the Schwab Bank – sorting risk, bank run risk, regulatory risk, and valuation risk, the analyst tells investors in a research note. The firm say one way to address the bank risk is to de-bank, and return to operating the way it did historically, which was a focus on sweeping cash into money market funds and earning an elevated management fee rather than an even larger spread. While earnings would fall materially were Schwab to de-bank, the stock would trade at a higher multiple, which would justify a higher value than the stock is trading at today, contends JPMorgan. At a 20-times multiple, a de-banked 2024 earnings per share projection of $3.20, the stock would be worth $64 per share, noticeably higher than the current stock price, writes JPMorgan.