Charles Schwab stock declines on Morgan Stanley downgrade

Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss a Morgan Stanley analyst’s decision to downgrade Charles Schwab stock to Equalweight.

Video transcript

JULIE HYMAN: Speaking of analyst calls, let's talk about a Morgan Stanley call. It's downgrading Charles Schwab from overweight to equal weight as the analyst says clients are moving cash out of the firm's low-interest-rate bank accounts at twice the rate that Morgan Stanley expected.

And this is interesting here. You know, we perhaps haven't talked enough about Charles Schwab amidst this banking crisis because it's been one of the companies that has really been under scrutiny here and has been hit amidst all of this going on. Charles Schwab has come out and said our liquidity is fine. We're doing OK.

But nonetheless, something that the Morgan Stanley analyst is zeroing in on here is that we are seeing client money moving into money-market funds. $20 billion a month as the rate at which that is happening. Now, it's not going away from Charles Schwab entirely.

BRAD SMITH: Right. Right.

JULIE HYMAN: I think that's important. But it is moving around into different type of instruments.

BRAD SMITH: Yeah. Within this report, they-- in this note, rather, they said that the investment thesis has been pushed out and we have less confidence around the timing of an improvement. And for Charles Schwab, you've been keeping an eye on the shares over the past-- over the past year, yeah, down by about 40%. But a lot of that drop really taking place here in recent weeks as well.

So for shares of SCHW, it seems that just another bearish call here on the Street as the stock is down by about 30% month to date. Does not come at a great time for them. And so we'll see exactly where the rest of the analysts and those calls continue to line up at as well.