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Morgan Stanley leans bullish on Schwab after a strong quarter
Schwab reported record $7.07 billion in Q2 revenue and raised full-year revenue growth guidance to 17.5% to 18.5%, while daily average trades hit a record 11.9 million.
Charles Schwab’s second-quarter results were described as among the strongest on record, yet the stock fell about 2.5%, prompting Morgan Stanley to reiterate a bullish stance after the report. Yahoo Finance said Schwab posted adjusted earnings of $1.62 per share and record revenue of $7.07 billion in the quarter, topping Wall Street estimates on both measures.
Schwab also lifted its full-year revenue growth outlook to between 17.5% and 18.5%, up from the 14% to 15% range it projected at its May investor day. Yahoo Finance reported that Morgan Stanley attributed the share selloff to a positioning issue rather than a fundamental problem.
Morgan Stanley noted that the guidance increase was not driven by changes in net interest margin assumptions, which it said were unchanged from May at 3.00% to 3.10% for the full year. Instead, Yahoo Finance said the revenue uplift reflected stronger client engagement and transaction activity, with Schwab CEO Rick Wurster pointing to generational and technological shifts.
The earnings release cited additional operating metrics, including record daily average trades of 11.9 million, up 57% year over year. Yahoo Finance also reported trading revenue rose 28% year over year to about $1.2 billion, while bank loan balances reached $67 billion, up 33% from a year earlier, and pledged asset line balances climbed to $33.4 billion, up 59% year over year.