Charles Schwab upgraded to buy from neutral, but cut the price target on Citigroup to $75

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Charles Schwab Corp. SCHW,
It was raised to buy from neutral on Monday by Citigroup analysts, who see a “compelling entry point” from its 23% decline in two days. Shares of the financial services company were down 7% in premarket trading, hit by the Silicon bank failure. “We see near-term revenue/earnings headwinds from rising funding costs and continued client sorting, but we believe these are reflected in the current stock price. We do not see material risk to deposit SCHW, given the structure of its deposit base and customer protection ($750K in insurance, 3 bank charters), Citi analysts Christopher Allen and Alessandro Balbo said. They noted that Schwab pointed to $100-$150 billion of funding potential from supplemental liquidity sources — retail CDs, advances from federal home loan banks and wholesale funding/repos. It had borrowed $17.1 billion in external debt facilities and $6.05 billion in retail brokered CDs through the end of 2022, while through the end of the year to February, it had borrowed an additional $16.4 billion in external debt facilities and $9.4 billion in additional brokered CDs The company assured that these moves were temporary, Citi said. cut the price target from $84 to $75 per share, which still trades at a multiple of 14 times their 2024 earnings per share. Citi analysts said they still prefer brokers that have low levels of client cash/sorting deposit risk, such as Interactive Brokers Group [s: ibkr] and Financial Holdings [s: lpla],