While Charles Schwab shares are up about 20% from their March low, boutique equity research firm Redburn isn’t so sure the recovery is warranted. Analyst Charles Bendit downgraded Charles Schwab to sell from neutral on Thursday. Bendit’s price target of $54 implies the shares may fall about 3% from Wednesday’s close price. Bendit said although Schwab’s decline after March’s banking sector crisis may seem like “an attractive entry point into a potentially long-term winner,” he is opting to be more cautious in the short-term. The analyst said the Federal Reserve’s ongoing interest rate hikes are one of the bank’s major headwinds for earnings. Schwab shares are off some 38% from this year’s high reached in early January. “As clients continue to ‘sort’ cash out of sweep features and into higher yielding money market funds, deposits are being replaced with expensive borrowing to avoid crystallizing paper losses on the bank’s securities portfolio. This has ramifications for earnings,” Bendit wrote in a note in Thursday. While Schwab shares have been rising after taking a hit during the bank stock panic in March, share prices still remain far below their pre-crisis levels. The stock plunged more than 32% in March after the collapse of Silicon Valley Bank. While shares have gained about 3% month-to-date in April, Schwab is still down 35% in 2023. SCHW YTD mountain Charles Schwab stock To be sure, several prominent investors, including Oakmark Funds’ Bill Nygren, are among many who have opted to buy the dip in Schwab. Nygren told CNBC on Wednesday that Schwab is one of his favorite financial stocks, saying his bullishness stems from its position as the lowest-cost provider of wealth management services. Longtime investor Ron Baron also said he increased his position in the Schwab during its double-digit decline mid-March. Nevertheless, Bendit believes now may be a “cost of equity moment” for the stock. The analyst added that stricter capital rules for midsize banks could materially impair Schwab’s capital position. He noted that the company has already paused its active share buyback program in light of regulatory uncertainty — which also calls into question its earnings per share growth. “Potential re-regulation of midsize banks in the wake of the regional banking crisis might impact Schwab,” Bendit said. “So, while we think this is a high-quality business, in the short term we see merit in being more cautious.” —CNBC’s Michael Bloom contributed to this report.