Charles Schwab: Buy Rating with $111 PT Amid Robust Growth and Resilience

We initiate SCHW at Buy/$111 PT. The Charles Schwab Corporation manages ~$8T+ in client assets

through a full-service brokerage, banking, and wealth platform. Behind its brand, Schwab has kept structurally constructing a platform around NII durability and client asset growth that can weather a monetary cycle as competitors struggle for scale. The structural scale feels particularly timely in light of the complex crossroads that the market finds itself at, likely reflecting persistent real rates and QT that have long weighed on traditional financials. SCHW’s ability to deliver FY25E EPS growth of 42% ($4.25) and 19% FY26E growth ($5.05), with capex discipline, a ~5.5% NNA CAGR, and incremental operating leverage from planned buybacks, we believe can out-perform consensus expectations even if headline VOLUME volumes soften to modest stag-NIM erosion off cycle peak. Our 22.0x forward multiple intentionally strikes a balance, with premium positioning and mid-teens EPS leverage underpinned by reasonable mean-reversion risk built in as the stock trades at 56% above peer P/E medians. The market debate is keenly focused on the trajectory of Fed cuts and whether NIM is "one-and-done," yet the reality is the fundamental platform and model provides an element of insulation that few financials can point to in a structurally higher-rate environment. Macro uncertainty around client engagement and permanence of the premium is not trivial but unlikely to disrupt a risk/reward that offers 15% upside and what we view as asymmetrical optionality over the long-term. Put simply, the stock offers the resilience and upside that the market needs.