Goldman cuts Schwab target to $117 after deposit decline

Goldman Sachs cut its Charles Schwab price target to $117 from $122 while keeping a Buy rating after third-quarter 2026 results, Investing.com reported on Oct. 16.

The lower target reflects Goldman’s reduced earnings-per-share estimates for 2026 through 2028, even after Schwab posted adjusted third-quarter EPS of $1.69 versus Wall Street’s $1.66 estimate.

Goldman revised its Schwab EPS forecasts to $6.40 for 2026, $7.74 for 2027 and $9.42 for 2028, according to the Investing.com article. Its previous estimates were $6.41, $7.97 and $9.48, respectively.

The main drag in Goldman’s model was a weaker outlook for net interest income, the spread-based revenue Schwab earns from interest-bearing assets after funding costs. The article said tighter expense control partly offsets that pressure.

Schwab’s deposits fell 2% in the third quarter to $244 billion. Management attributed much of the deposit movement to clients’ active participation in markets, according to the article.

The deposit decline matters because a less favorable funding mix can reduce the benefit Schwab gets from higher interest rates and loan growth. Goldman still expects net interest income and net interest margin, a measure of spread income relative to interest-earning assets, to improve in 2027 and 2028.

Schwab reported a third-quarter net interest margin of 304 basis points. Management is targeting a net interest margin over time linked to the federal funds rate, according to the article.

The broker’s customer-asset picture looked stronger than its deposit trend. Net new asset growth was about 6%, while the article said expense management remained strong.

Schwab reported third-quarter revenue of $7.17 billion, below the $7.2 billion estimate cited by Investing.com. Adjusted EPS rose 29% from a year earlier to $1.69, ahead of the $1.66 Wall Street estimate.

Schwab shares closed at $94.16 on Oct. 15, down 2.73%, and were quoted at $94.89 in premarket trading, up 0.77%, at 08:11:20 on the Investing.com display.

Valuation remains central to the debate. The article said Schwab trades at 12 times 2027 earnings, below a historical average of 16 times, while the market is concerned about structural risks to cash sweep revenue across the brokerage sector.

Cash sweep revenue comes from uninvested client cash that brokerages place into interest-bearing accounts or vehicles. The risk for Schwab is that client behavior, competition or industry changes reduce the economics of that cash over time.

Citizens took a more constructive view than Goldman’s target cut implies, keeping an Outperform rating and a $120 price target, according to the same article. Citizens cited business momentum and said Schwab trades at about 12.3 times its revised 2027 adjusted EPS estimate of $7.65.

The article also said 10 analysts had cut near-term earnings estimates. Schwab management discussed artificial-intelligence tools for advisers and retail clients, while limiting access to Schwab accounts by unaffiliated third-party AI agents.

Source: analyst-ratings article, Investing.com, Oct. 16, 2026