Nomura Securities Starts E*TRADE (ETFC) at Buy; Better Days Ahead
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Price: $49.26 --0%
Rating Summary:
11 Buy, 13 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
11 Buy, 13 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Nomura Securities initiates coverage on E*TRADE (NASDAQ: ETFC) with a Buy. PT $10.00.
Analyst, Keith Murray, said, "As the $13bn legacy loan book winds down via charge-offs and paydowns, we expect provision expense to decline from $413mn in 2011 to $286mn in 2012 and $159mn in 2013. We estimate that each $100mn decline adds ~$0.20 in EPS. We think the biggest risk to our loss estimates is a spike in unemployment as opposed to declines in housing prices, given already high LTVs and the portfolio’s seasoning (with average age of home equity loans at 5.5 years, one- to four-family loans at 5.2 years)."
"Not the Best Franchise, ut the Cheapest Stock with Potential Catalysts: While we think Schwab (Nasdaq: SCHW) and TD Ameritrade (Nasdaq: AMTD) are stronger franchises, neither looks cheap on run rate earnings and both need higher interest rates to see meaningful EPS growth. We prefer ETFC given that it is trading at 8x our 2013 estimate, can see EPS improve in a low-rate environment, and has the potential catalyst of paying down costly debt in 2013. While investors were disappointed that ETFC did not find a buyer during its recent strategic review, we think it remains a likely takeover target (AMTD a likely buyer) in a better economic backdrop."
For an analyst ratings summary and ratings history on E*TRADE click here. For more ratings news on E*TRADE click here.
Shares of E*TRADE closed at $7.72 yesterday.
Analyst, Keith Murray, said, "As the $13bn legacy loan book winds down via charge-offs and paydowns, we expect provision expense to decline from $413mn in 2011 to $286mn in 2012 and $159mn in 2013. We estimate that each $100mn decline adds ~$0.20 in EPS. We think the biggest risk to our loss estimates is a spike in unemployment as opposed to declines in housing prices, given already high LTVs and the portfolio’s seasoning (with average age of home equity loans at 5.5 years, one- to four-family loans at 5.2 years)."
"Not the Best Franchise, ut the Cheapest Stock with Potential Catalysts: While we think Schwab (Nasdaq: SCHW) and TD Ameritrade (Nasdaq: AMTD) are stronger franchises, neither looks cheap on run rate earnings and both need higher interest rates to see meaningful EPS growth. We prefer ETFC given that it is trading at 8x our 2013 estimate, can see EPS improve in a low-rate environment, and has the potential catalyst of paying down costly debt in 2013. While investors were disappointed that ETFC did not find a buyer during its recent strategic review, we think it remains a likely takeover target (AMTD a likely buyer) in a better economic backdrop."
For an analyst ratings summary and ratings history on E*TRADE click here. For more ratings news on E*TRADE click here.
Shares of E*TRADE closed at $7.72 yesterday.
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