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Why Charles Schwab Stock Got Socked Today
Key Points
One reduced his by $13 per share on Friday.
He did, however, maintain his equivalent of a buy recommendation.
A price target chop was the news item dinging Charles Schwab (NYSE: SCHW) stock on Friday. It wasn't the first such move over the past few business days, and that collective bearishness worsened investor sentiment. The storied brokerage's shares fell by nearly 3% that trading session as a result.
A slice for Schwab
Well before market open that day, Michael Cyprys from ever-influential investment bank Morgan Stanley reduced his fair value assessment on Schwab's equity. To him, it's now worth $135 per share, down some distance from his previous level of $148. Despite the slice, Cyprys remains bullish on the company, as he maintained his overweight (i.e., buy) recommendation.
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The analyst's move was based on his company's relatively tepid expectation for the brokerage and securities exchange operator segments of the broader financial sector, according to reports.
Morgan Stanley's institutional view of those segments is that they will collectivvely experience only modest improvements in profitability, to the point where its estimates for them average 4% to 5% below consensus for both 2026 and 2027.
Cautious optimism
So I'd glean from this that Morgan Stanley is expecting thinner trading and reduced client activity in other areas to affect profitability.
Personally, I'm more positive, as there's still plenty of capital sloshing around the securities markets and investor sentiment remains bullish, if somewhat cautious. Unless there's a serious global economic slowdown stemming from the Iran war, I think the markets will remain frothy. I'd put Schwab stock firmly in the buy category.
Charles Schwab is an advertising partner of Motley Fool Money. Eric Volkman has positions in Charles Schwab. The Motley Fool recommends Charles Schwab and recommends the following options: short June 2026 $97.50 calls on Charles Schwab. The Motley Fool has a disclosure policy.