SunTrust Robinson Humphrey Reiterates Buy as TD Ameritrade (AMTD) Announces Scottrade Acquisition
SunTrust Robinson Humphrey reiterated a Buy rating on TD Ameritrade (NASDAQ: AMTD), and raised the price target to $42.00 (from $38.00), following the company's 4Q earnings report and announced acquisition of Scottrade. The total consideration ($4 billion) and basic structure of the transaction were consistent with earlier reports. The deal strengthens AMTD's core online trading business, which has become increasingly competitive and scale-dependent.
Analyst Douglas Mewhirter commented, "We maintain our Buy rating on AMTD shares following an inline F4Q report and AMTD's announcement reaching an agreement to buy Scottrade (Private). We believe that the transaction should shore up TD Ameritrade's most vulnerable segment - online trading - and should give it more runway to diversify into feebased products and grow its RIA custody segment. Meanwhile, AMTD should be able to continue its generous capital return policy. We have lowered our F17E EPS to $1.64 from $1.73, and introduced a F18E EPS of $1.75. Our $42 price target (up from $38) reflects the added value from the merger."
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Shares of TD Ameritrade closed at $35.46 yesterday.