Deutsche Bank analysts said they see buying opportunity in The Charles Schwab Corporation (NYSE:SCHW) shares after a sell-off that started on Thursday (stock is down more than 30%).
The analysts view the sell-off as overdone with liquidity risks overblown. The main investor concern of the day was around liquidity risk should client deposit withdrawals accelerate, and the risk that the company would need to sell securities at a loss or raise capital to fund withdrawals.
The analysts view the company’s liquidity profile as being quite solid against expected, or even a more severe scenario, of client deposit withdrawals from its balance sheet.
Meanwhile, Citi upgraded Charles Schwab to buy from neutral with a price target of $75.00 (from $83.00). While there may be pressure from client cash sorting, the analysts believe there is a low risk of deposits leaving the company due to the composition of its deposit base and customer protections. Although tapping supplemental funding may hurt earnings in the short term, the company is expected to swap out these funding sources with organic ones as soon as possible.
Analysts See Buying Opportunity at Charles Schwab After 30 percent Drop