Shares of Charles Schwab could rise 20% as interest rates peak, Goldman Sachs says in upgrade

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This could be a strong year for Charles Schwab , according to Goldman Sachs. Analyst Alexander Blostein upgraded shares to buy from neutral. The analyst also has a price target of $98 per share, implying upside of roughly 20% from Tuesday’s close. Shares rose more than 1% on Wednesday. “We think that most of the macro-driven earnings upside from higher rates is already in the run-rate, but select upside opportunities still exist,” Blostein wrote in a Wednesday note. “Importantly, with terminal rates likely stabilizing at the highest rate since the GFC, we think the sector’s significantly enhanced earnings power should not be ignored (even if short-term rates decline modestly), driving both accelerated share repurchases and more inorganic opportunities,” Blostein added. Charles Schwab has “under-appreciated earnings and capital return opportunities” through 2024 that will boost the stock, according to the analyst. “SCHW is likely to see the most growth in cash revenues (NII + BDA fees) in 2024 vs. 4Q22 levels at an estimated +26%,” the analyst wrote. —CNBC’s Michael Bloom contributed to this report.