Charles Schwab Corporation Common Stock (NYSE:SCHW) Upgraded by UBS

Charles Schwab Corporation Common Stock (NYSE:SCHW) stock rose 0.016% (As on June 22, 11:12:20 AM UTC-4,Source: Google Finance) after  UBS upgraded Charles Schwab to buy from neutral. UBS said in a note that Schwab was “well insulated from credit and market risk.” The company’s elevated operating expenses might hamper its bottom-line growth to some extent. However, strategic acquisitions, likely to be earnings accretive, have reinforced Schwab’s position as a leading brokerage player. The company’s offering of commission-free trading has led to a rise in client assets and brokerage accounts, thereby improving trading revenues. Schwab’s efficient capital deployments reflect a solid balance sheet position, through which it will enhance shareholder value.

Meanwhile, the company has recently announced plans to change the name of its premier advisory solution, which made its debut two decades ago. Next month, Schwab Private Client (SPC) will be renamed Schwab Wealth Advisory (SWA) to better reflect the depth of wealth advisory experience, dedicated service, and ongoing enhancements to investing solutions delivered to its more than 70,000 households representing approximately $146 billion in assets as of December 31, 2021. Core net new assets brought to the company by new and existing clients totaled $32.8 billion in the month of May, as this year’s tax season followed a normal schedule for the first time since 2019. Net new assets excluding mutual fund clearing totaled $34.2 billion. Total client assets were $7.30 trillion as of month-end May, down 1% from May 2021 and flat compared to April 2022. Client cash as a percentage of assets was 12.0% as of month-end May, compared with 10.8% in May 2021 and 11.9% in April 2022. To the extent equity market valuations, client trading activity, and margin loan utilization remain at early June levels, the company currently expects sequential revenue growth of 7.5% to 8.5% in the second quarter. At the same time, the company anticipates second quarter GAAP expenses staying essentially flat relative to the prior period. The company’s net income for the first quarter of 2022 was $1.4 billion compared with $1.6 billion for the fourth quarter of 2021, and $1.5 billion for the first quarter of 2021. Total revenues of $4.7 billion were just under the record level set in the year-ago quarter amidst that extraordinary surge in client activity, with increases in net interest revenue (NIR) and asset management and administration fees (AMAF) essentially offsetting the effects of trading activity returning to more moderate levels.

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