Charles Schwab, a financial services company, released its activity report for Feb. 2021, and in response, shares rose 1.9% to close at $67.65 on March 12.
Schwab (SCHW) opened 1,211,000 new brokerage accounts in February, which more than tripled from the 159,000 new accounts reported in Feb. 2020. Accounts also rose 11% from the prior month.
The company’s active brokerage accounts came in at 31.5 million at February-end, up 3% from January and 152% from the prior-year month. Further, corporate retirement plan participants were 2.1 million, up 1% from the prior month and 21% year-over-year.
The number of clients’ banking accounts was 1.5 million at the end of February, increasing 2% from Jan. 2021 and 9% from Feb. 2020. (See Schwab stock analysis on TipRanks)
On top of this, Schwab’s total client assets came in at $6.9 trillion, up 2% from the prior month and 79% from Feb. 2020. Net new assets were $37 billion, up 8% from Jan. 2021 and 52% year-over-year.
Schwab’s CFO Peter Crawford commented, “While retail trading activity overall has been increasing since Schwab helped lead the industry to $0 commissions1 in October 2019, the effects of work-from-home, technology-driven enhancements in access to information, and the increased convenience of stock-trading have further heightened investor engagement.”
“Most recently, the added accelerant of social media-influenced trading has led to a massive surge in interactions for brokerage firms and helped push equity trading volumes to truly breathtaking heights – well beyond the pre-pandemic peak reached during the 2008 financial crisis,” Crawford added.
On March 4, J.P. Morgan analyst Ken Worthington initiated coverage of the stock with a Buy rating and a price target of $79 (16.8% upside potential).
Worthington views “Schwab as a leader in retail brokerage, with growth opportunities that leverage changes to structure or leverage secular trends that should drive earnings growth for multiple years.”
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 9 analysts suggesting a Buy and 4 analysts recommending a Hold. The average analyst price target of $68.04 implies that shares are almost fully valued at current levels. Shares have appreciated 28.2% so far this year.
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