November 16, 2012 at 08:55 AM EST
Compass Point initiates Coverage on Charles Schwab (SCHW)

Compass Point has announced on Friday that they will begin to cover financial services holding company, Charles Schwab Corp(SCHW).

The firm has initiated coverage on SCHW, and has given the company a rating of “Neutral” with a $13.50 price target. This price target suggests a 5.7% increase over the stock’s current price of $12.73.

An analyst from the firm commented, “we expect ongoing macro uncertainty to continue to weigh on interest rates, which in turn, should keep Schwab earnings (and shares) relatively muted over the next 12 months given the company’s heavy reliance on net interest income. In addition, although management has done a good job of keeping expenses in check, and capital flexibility appears to be growing, we expect continued equity market volatility to leave organic growth and trading activity subdued. We could become more constructive on the stock if we had greater conviction that interest rates were sustainable at higher levels, meaningful share repurchase activity was approaching, or at a cheaper valuation. But in the meantime, we see limited near-term catalysts and look for shares to remain range-bound.”

Charles Schwab Corp shares were mostly flat during premarket trading Friday. The stock is up 13.06% YTD.

The Bottom Line
Shares of Charles Schwab (SCHW) have a 1.89% dividend yield, based on last night’s closing stock price of $12.73. The stock has technical support in the $10.50-$11.00 price area. If the shares can firm up, we see overhead resistance around the $14.00-$14.50 price levels.

Charles Schwab Corp(SCHW) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.1 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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