Barclays Maintains an 'Equalweight' on E*TRADE (ETFC); Noisy, but Solidly Profitable Quarter
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Price: $49.26 --0%
Rating Summary:
11 Buy, 13 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
11 Buy, 13 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Barclays maintains an 'Equalweight' on E*TRADE (NASDAQ: ETFC) price target of $13.00.
Barclays analyst says, "Having declined 26% since prior to the 2Q earnings in July (S&P500: -8%), we believe that investors are appropriately expressing a view that ETFC is the most economic sensitive, or more correctly, recession sensitive name in our e-broker coverage. Should a new recession occur, ETFC is negatively exposed as loan losses would re-surge, impeding the firm's ability to restructure its debt load and impairing earnings power for some time. While both we and our economics team do not believe we are headed toward a recession, an objective assessment of the risk has risen in the last several months, albeit to still quite low levels. Therefore, while we understand the pressure on ETFC's shares, we do not believe the current valuation represents the fundamental long-term value of the company."
"We believe the firm has sufficient capital (Basel-III Tier 1 common: 9.5%) to earn its way through the remaining loan losses and will be able to upstream earnings to the parent company to restructure its expensive debt load, boosting its earnings power in due course. In the meantime, we expect the shares to continue to be quite volatile, much like the rest of our capital markets coverage, until the markets get more clarity on the economic picture and resolution of the European sovereign debt crisis spreading."
For more ratings news on E*TRADE click here and for the rating history of E*TRADE click here.
Shares of E*TRADE closed at $9.58 yesterday.
Barclays analyst says, "Having declined 26% since prior to the 2Q earnings in July (S&P500: -8%), we believe that investors are appropriately expressing a view that ETFC is the most economic sensitive, or more correctly, recession sensitive name in our e-broker coverage. Should a new recession occur, ETFC is negatively exposed as loan losses would re-surge, impeding the firm's ability to restructure its debt load and impairing earnings power for some time. While both we and our economics team do not believe we are headed toward a recession, an objective assessment of the risk has risen in the last several months, albeit to still quite low levels. Therefore, while we understand the pressure on ETFC's shares, we do not believe the current valuation represents the fundamental long-term value of the company."
"We believe the firm has sufficient capital (Basel-III Tier 1 common: 9.5%) to earn its way through the remaining loan losses and will be able to upstream earnings to the parent company to restructure its expensive debt load, boosting its earnings power in due course. In the meantime, we expect the shares to continue to be quite volatile, much like the rest of our capital markets coverage, until the markets get more clarity on the economic picture and resolution of the European sovereign debt crisis spreading."
For more ratings news on E*TRADE click here and for the rating history of E*TRADE click here.
Shares of E*TRADE closed at $9.58 yesterday.
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