Analysts Have High Hopes for Charles Schwab Before Earnings

Charles Schwab Corporation (NYSE:SCHW) is up 0.6% at $70.75 this afternoon, just ahead of the financial company's earnings report, due out before the open tomorrow, July 16. Sentiment surrounding Charles Schwab stock is high ahead of the event, especially among the brokerage bunch. SCHW's 12-month consensus price target of $83.08 is a 17.1% premium to current levels, and of the 10 analysts covering the stock, nine say "buy" or better. 

Options traders have taken a slightly more bearish stance recently. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Charles Schwab stock sports a 50-day put/call volume ratio of 1.19, which stands higher than 99% of readings from the past year. An unwinding of some of this pessimism could put wind at Charles Schwab stock's back, especially considering the stock's impressive 98.6% year-over-year return. 

In fact, it seems like many of these traders are already changing their tune, with 9,132 calls across the tape so far today, double the intraday average and almost two times the number of puts exchanged. The weekly 7/23 71.50-strike call is by far the most popular, followed distantly by the December 80 call, with positions being opened at both. 

When we last covered SCHW, the equity was nursing a slight pullback. The shares of SCHW were able to find their footing at the 80-day moving average, and though early July saw a brief dip below this level, it looks like Charles Schwab stock may find support here once more. 

Charles Schwab stock has a history of mostly positive post-earnings reactions during the past two years, with higher next-day returns during five of these eight instances. Regardless of direction, Charles Schwab stock has averaged a next-day return of 3.5% in this time period, which is roughly in line with the 3.6% swing the options pits are pricing in this time around.