Charles Schwab Corp Faces Stock Decline and Analyst Warnings

Charles Schwab Corp faced a tough day on Wednesday as the company warned of the need to downsize in order to protect its profitability. This warning led to a reduction in estimates by analysts, impacting investor sentiment towards the stock. Despite reporting second-quarter revenue of $4.69 billion which slightly surpassed analyst expectations, the company’s adjusted earnings of 73 cents per share still managed to beat estimates of 72 cents per share.

JPMorgan analyst Kenneth Worthington noted disappointing trends in net new asset growth and interest earning assets, leading to a decrease in the firm’s price target and adjusted earnings expectations for 2025. Worthington described the commentary on a vision for a smaller bank as contributing to the decline in share value, expressing concern about management’s commitment to this strategy.

Goldman Sachs also adjusted its price target and EPS estimates for Charles Schwab, highlighting challenges such as Deposit outflows at the end of the quarter and an increase in short-term funding. The analyst believes the company is on a challenging road to EPS growth, with uncertainties around deposit growth and the timing of share repurchases. As a result of these factors, Schwab shares were down 6.20% to $63.25 following the analyst reports.