UBS Remains Bullish Following TD Ameritrade's (AMTD) 1Q Earnings

UBS maintained a Buy rating on TD Ameritrade (NASDAQ: AMTD), and cut the price target to $37.00 (from $40.00), following the company's 1Q earnings report. Beyond today's release, UBS is wondering if the stock is not getting appropriate credit for cash generative potential that it has, even without a rate upside. UBS also noted that on a cash PE basis, AMTD shares are trading at just over 15x CY16 estimate.

Analyst Alex Kramm commented, "AMTD shares performed in line with, if not slightly better than, peers following a F1Q EPS release that showed solid expense management. Beyond today's release, however, we wonder if the stock is not getting appropriate credit for cash generative potential that it has even without rate upside. Although we do not typically look at AMTD excluding intangible amortization, we note that on a cash PE basis (adds ~$0.10/year), AMTD shares are trading at just over 15x our CY16 estimate. As investors look for inexpensive stocks that are not entirely rate-dependent, we believe AMTD, which has produced continued good growth and whose 40%+ revenues from commissions should benefit from current market conditions, stands out as an underappreciated option. In fact, while SCHW has been our preferred play among discount brokers given its opportunity to sweep funds to the balance sheet, we wonder if AMTD may prove to be the better near-term play given outsized exposure to trading volumes."

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 $28.31 yesterday.

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