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Schwab Has 40% Upside: Bernstein

The waiver of money market fees could disappear completely with an increase in the federal funds rate of just 100 basis points, according to Hintz.

"Future revenues should also get a boost from the typical late cycle rebound in retail activity" among investors, Hintz said. "Our analysis of prior recoveries indicates that trading volumes and asset management fees should rebound, leading to a ~$190mm/year increase in revenues."

Bernstein's rating of an aggressive price target for Schwab obviously represents a long-term stock play, and there is no way to predict when the Fed will begin to increase short-term rates. But it will happen. They can't go any lower.

Hintz also pointed out that Schwab's "client assets are up 77% while the stock price has only increased 2%" since 2008. The analyst expects Schwab to continue adding client assets, "between 4% - 6% per year (including the reinvestment of dividends and interest income) through the end of the decade."

Schwab's shares were up 1.13% in early trading on Monday, to $16.58

SCHW Chart SCHW data by YCharts

Interested in more on Charles Schwab? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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