Deutsche Bank thinks Charles Schwab stock is poised to break out in a more challenging market environment in the next three-to-six months. The bank reiterated the stock as buy, and its price target of $71 per share implies upside of 37% from Wednesday’s close. Schwab has been under pressure this year, down 37.8%, as liquidity concerns arose during the regional banking crisis. Investors feared the company could suffer a similar fate to the Silicon Valley Bank. However, the company defended its financial position and shares have stabilized since March. Analyst Brian Bedell also noted that Charles Schwab shares could get a boost once market volatility picks up. SCHW YTD mountain Shares of Charles Schwab have lost about 37% from the start of 2023. “After a lull in market volatility since March, we expect turbulence to resume this summer, assuming economic data weakens & markets increasingly debate recession timing and Fed policy,” he wrote Thursday. The firm listed Schwab as the premier pick to navigate the environment Bedell described, while noting that the stock is trading at about a 25% price-to-earnings ratio discount compared to the S & P 500. Bedell also said that a slowdown in cash sorting will also help Schwab shares. “We are encouraged by the recent improvement in the pace of balance sheet deposit decline at SCHW, with client cash sorting continuing to moderate. The pace of core balance sheet deposit decline in April was better than our forecast,” he said. Risks remain for Schwab itself, Bedell added, which includes the Federal Reserve ending monetary tightening sooner than previously thought, a pullback in long-term Treasurys and higher U.S. corporate taxes. — CNBC’s Michael Bloom contributed to this report.
