UPDATE: UBS Upgrades TD Ameritrade (AMTD) and Charles Schwab (SCHW) to Buy

(Updated - April 14, 2014 1:41 PM EDT)

UBS upgraded TD Ameritrade (NYSE: AMTD) from Neutral to Buy with a price target of $41 (from $36). Charles Schwab Corp. (NYSE: SCHW) was also upgraded from Neutral to Buy with a price target of $33 (from $28).

Analyst Alex Kramm said, "We believe 1) recent fear that noise around high frequency trading could drive changes to the current retail whole-selling/payment-for-order-flow regime are misplaced; 2) our expectations of rate upside in 2016 are not reflected in the current price; and 3) retail sentiment and the operating environment continue to improve. We believe AMTD now has no rate upside reflected in the current valuation, which could drive company repurchases."

"Discount broker stocks have been weak recently as noise around high frequency trading has increased concerns by some investors that regulators could target common retail execution practices such as payment for order flow. Payment for order flow drives a significant portion of revenues for discount brokers, particularly for AMTD. While we expect the SEC to conduct a thorough review of market structure later this year (concept release), we believe payment for order flow, which has been both in place and reviewed for decades, will not be regulated away," he added.

For an analyst ratings summary and ratings history on TD Ameritrade click here. For more ratings news on TD Ameritrade click here.

Shares of TD Ameritrade closed at $29.90 yesterday.

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