Morgan Stanley Downgrades Charles Schwab for First Time, Slashes Target

Charles Schwab Corp.’s clients are pulling cash out of the firm’s low-interest-rate bank accounts at twice the rate that Morgan Stanley expected, prompting the firm’s analyst to yank his buy-equivalent rating on Schwab for the first time since he began covering the brokerage stock seven years ago.

Client money is moving from so-called sweep accounts into money market funds at a rate of $20 billion a month, analyst Michael Cyprys wrote in a report cutting the stock to equal-weight from overweight. He reduced his target for the share price over the next year to $68 from $99. Schwab’s shares, which have fallen 33% this month, slipped 5% to $52.47 Thursday.