Deutsche Bank Starts TD Ameritrade (AMTD) at Buy

Deutsche Bank initiates coverage on TD Ameritrade (NYSE: AMTD) with a Buy rating and a price target of $38.00. Analyst Brian Bedell noted lower risk of capital return and growth.

"We think AMTD’s relatively unique business model substantially enhances long-term franchise value for the following reasons: 1) the outsourced banking agreement with 41%-owner TD Bank enables AMTD to generate high returns on cash mgmt without significant capital burdens or credit risk, 2) the capitallight model enables AMTD to maximize capital return to shareholders via share buybacks and dividends, 3) EPS leverage to higher rates is substantial and AMTD has a potentially longer-term rate tailwind as its IDA portfolio rolls into higher yields over time, 4) AMTD still has the strongest client asset organic growth rate vs. peers, & 5) AMTD also retains the highest operating margins," said Bedell.

"Key catalysts for the stock over the next 12 months are: 1) improving US economic data that advances speculation on timing of short-term interest rate cycle, 2) likelihood of higher market volatility into rate cycle that may improve trading activity, & 3) continued strong client asset organic growth rates," 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 $32.31 yesterday.

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