It was not that long ago when The Charles Schwab Corporation (NYSE: SCHW) was having lots of trouble looking forward. Zooming toward the summer of 2025 is a totally different outlook. If Goldman Sachs is right, Charles Schwab may be among the best financial stock picks a year out.
Goldman Sachs has upgraded Charles Schwab to Buy from Neutral and it has set a $100 price target. This implies more than 25% upside from Schwab’s prior $79.38 close. Investors also get close to a 1.4% dividend yield based on the current share price. When analysts issue new “Buy” ratings they typically issue upside targets of 10% to 15% looking a year out from the date of their research report.
Schwab had not been immune against the recent stock market malaise. Its shares were back up to $81 in March, but the panic selling in April took its shares briefly down to $67 before a rapid recovery. If the market falters again, this means that Goldman Sachs would highly favor Charles Schwab’s stock versus most financial picks. And Goldman Sachs is not the only firm to highlight expected gains ahead.
This fresh Goldman Sachs report highlights Schwab as now having one of the best earnings growth outlooks in a highly uncertain environment. The firm now expects earnings to grow 25% on a compounded basis from 2025 through 2027. Another boost comes from Schwab’s efforts to stabilize its balance sheet and net interest income acceleration after it recently hedged against risks from lower short-term interest rates.
Where investors can really win comes from the flexibility for Schwab to resume significant share buybacks. This will further increase the earnings per share recovery at the same time earnings will rise from sustained organic growth.
Schwab is valued at roughly 17-times its expected earnings, higher than banks but more reasonable than some financials. Goldman Sachs is putting a premium here because of that higher earnings power. And that $100 price target is valuing its stock at roughly 17-times forward (2027) earnings on a discounted basis. The firm’s $4.44 earnings (EPS) estimate for 2025 is expected to rise to $6.29 EPS in 2027 — and their estimates are higher than consensus.
While Goldman Sachs has raised is target to $100, it was Deutsche Bank that had the highest target price at $105 early on in 2025 — and Citi raised Schwab’s rating to Buy from Neutral with a $102 price target on April 2. Other firms have recently hiked their price targets as well, but some firms have recently cut their targets in light of the market correction in April:
- 4/22 UBS (Buy) target raised to $96 from $95
- 4/22 KBW (Outperform) target raised to $93 from $90
- 4/21 JMP Securities (Outperform) maintained at $94
- 4/21 Truist (Buy) target cut to $84 from $85
- 4/21 JPMorgan (Overweight) target raised to $95 from $92
- 4/08 Wells Fargo (Overweight) target cut to $87 from $93
- 4/08 Piper Sandler (neutral) target cut to $74 from $78
- 4/08 Morgan Stanley raised to Overweight from Equal-Weight with $76 target
- 4/07 Barclays (Overweight) target cut to $84 from $96
Charles Schwab’s stock was last seen up 1% at $80.15, and it has a 52-week trading range of $61.01 to $84.50.
