10:51 AM EDT, 04/16/2024 (MT Newswires) -- Charles Schwab's ( SCHW ) shares have been underperforming in a positive macro environment partly because of its declining financial metrics, Bank of America Securities said in a note Tuesday.

Despite optimism about the company's ability to benefit from higher interest rates, there are concerns about the potential negative impacts of a higher net interest margin if rates remain high, according to the note.

The firm said Schwab has historically struggled during periods of rising rates but is well-positioned for lower rates due to the duration of its bank investments and its roughly $18 billion Accumulated Other Comprehensive Income balance.

BofA said Charles is "less asset sensitive than peers" and is revising long-term earnings per share estimates to reflect fewer anticipated rate cuts and increased retail engagement.

Slightly higher expenses and reduced leverage within the bank will partially offset these gains, the firm added.

Cash sorting challenges are expected to persist for Schwab in 2024 and will affect the size of its balance sheet, delay the repayment of its costly liabilities and impact the timeline for reinvesting its securities portfolio at higher yields, the note said.

BofA raised the price objective on Charles Schwab ( SCHW ) stock to $70 from $68 and reiterated its underperform rating.