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Investing.com - Raymond (NSE:RYMD) James raised its price target on Charles Schwab Corp. (NYSE:SCHW), a $172.6 billion financial services giant with a perfect Piotroski Score of 9 according to InvestingPro, to $103.00 from $99.00 while maintaining an Outperform rating following the company’s second-quarter 2025 results.
The investment firm expects Schwab Bank’s high-cost funding to be largely paid down by the end of 2025, which should lead to significant net interest margin upside for the financial services company. This outlook aligns with Schwab’s strong financial health, evidenced by its impressive 97% gross profit margin and 13% five-year revenue CAGR.
Raymond James noted that elevated market volatility is driving strong trading volumes, which helps offset potential net interest margin headwinds from possible Federal Reserve rate cuts later this year.
The firm expressed encouragement about solid trends in net new assets and account growth at Charles Schwab beyond the improving near-term financial outlook.
Raymond James sees a path for significant earnings per share growth in 2025 and 2026, along with potential upside to Charles Schwab’s current valuation.
In other recent news, Charles Schwab Corporation reported second-quarter earnings that exceeded expectations, driven by stronger-than-anticipated net interest income and lower operating expenses. The company posted net revenues of $5.85 billion, slightly surpassing analyst estimates, and adjusted expenses were about 4% lower than anticipated. Charles Schwab’s net interest income was a key factor in the earnings beat, coming in $84 million better than Street estimates. Following these results, the company raised its fiscal year 2025 guidance for both revenue growth and earnings per share. Piper Sandler adjusted its earnings per share estimates for 2025 and 2026, while Raymond James maintained its Outperform rating and raised its price target to $99.00. Truist Securities also increased its price target to $100.00, citing solid fundamentals despite some moderation in recent performance metrics. Additionally, Charles Schwab maintained a strong capital position after the Federal Reserve’s stress test, with a Common Equity Tier 1 ratio significantly exceeding regulatory requirements. The firm continues to manage substantial client assets, totaling $10.35 trillion as of May 31, 2025.
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