FBR Capital on Financial/Investment Services: An Attractive Summer Trade Amidst a Challenging Backdrop
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Price: $0.83 +12.16%
Rating Summary:
4 Buy, 18 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
4 Buy, 18 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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FBR Capital on Financial/Investment Services: An Attractive Summer Trade Amidst a Challenging Backdrop
FBR analyst said, "We are mostly in line with consensus in expecting a lackluster 2Q11 for the online brokers given an increasingly challenging operating environment, but we believe the recent pullback in the group creates a near-term buying opportunity for investors. As we tread through the seasonally slow period for trading activity, our analysis indicates that the summer months actually represent a solid entry point for near-term strength as the stocks have generally outperformed and valuation multiples expand in the back half of the year. In addition, although we expect management commentary to be relatively muted given another pullback in short-term rates and the resurgence of macro uncertainty, we see less downside to the stocks at current levels. On a relative basis, we still favor TD Ameritrade (Nasdaq: AMTD)(Outperform)(PT $24) and E*TRADE Financial (Nasdaq: ETFC)(Outperform)(PT $17), versus Charles Schwab (Nasdaq: SCHW)(Market Perform)(PT $19), given Schwab's greater leverage to interest rates and our view that significant rate hikes remain a longer-term event. Nonetheless, at these levels, despite some fundamental headwinds, even SCHW shares are starting to look more attractive."
FBR analyst said, "We are mostly in line with consensus in expecting a lackluster 2Q11 for the online brokers given an increasingly challenging operating environment, but we believe the recent pullback in the group creates a near-term buying opportunity for investors. As we tread through the seasonally slow period for trading activity, our analysis indicates that the summer months actually represent a solid entry point for near-term strength as the stocks have generally outperformed and valuation multiples expand in the back half of the year. In addition, although we expect management commentary to be relatively muted given another pullback in short-term rates and the resurgence of macro uncertainty, we see less downside to the stocks at current levels. On a relative basis, we still favor TD Ameritrade (Nasdaq: AMTD)(Outperform)(PT $24) and E*TRADE Financial (Nasdaq: ETFC)(Outperform)(PT $17), versus Charles Schwab (Nasdaq: SCHW)(Market Perform)(PT $19), given Schwab's greater leverage to interest rates and our view that significant rate hikes remain a longer-term event. Nonetheless, at these levels, despite some fundamental headwinds, even SCHW shares are starting to look more attractive."
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