Charles Schwab Corp. (NYSE:SCHW) may soon deliver one of the strongest earnings accelerations across the brokerage sector, opening the door to a strong upside for its stock, according to Goldman Sachs.

In a note shared Friday, Goldman Sachs analyst Alexander Blostein upgraded Schwab from Neutral to Buy, setting a $100 price target. He said the company offers “one of the best earnings growth outlooks” among peers, with earnings per share expected to compound at a 25% annual rate through 2027.

That's significantly above the brokerage industry's average of 15% and the broader financial sector’s 10%, measured by the Financial Select Sector SPDR Fund (NYSE:XLF).

What Is Driving Schwab’s Growth Outlook?

Blostein highlighted three main catalysts supporting Schwab's growth trajectory.

First, balance sheet stabilization is helping net interest income (NII) accelerate mechanically at about a 16% compound annual growth rate through 2027. Schwab's client cash levels have found a floor at around 4% of client assets, and the firm is aggressively paying down costly short-term borrowings, boosting margins.

Second, Schwab is rapidly building excess capital, estimated to reach about $20 billion by the end of 2027. After retiring $2.5 billion in preferred stock, the company could resume significant share buybacks starting from the second half of 2025.

Blostein models a mid-single-digit reduction in share count annually from then on, a driver of earnings growth that he believes is underappreciated by Wall Street.

Third, organic growth is showing signs of resilience. Schwab's recent market share gains and improved new account trends suggest it could return to its targeted 5%-7% organic growth range by late 2025.

Is Schwab’s Valuation Attractive Right Now?

Despite these tailwinds, Schwab is trading at 17 times its next-12-month earnings estimate, in line with its three-year average and at a discount to its five-year history of about 19 times.

“Relative to peer averages, SCHW has historically traded at a 40%+ premium, which we believe is similarly justified moving forward,” Blostein said.

Goldman's 12-month $100 price target assumes a 17 times multiple on Schwab's 2027 earnings, discounted back one year.

The firm’s updated EPS forecasts stand at $4.44 for 2025, $5.03 for 2026 and $6.29 for 2027, slightly above the consensus estimates by 4%, 0% and 7%, respectively.

Charles Schwab shares are up 1.20%, after advancing 2% the previous day. The stock remains down 17% from its record highs set in early 2022.

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