Seeking Alpha
Profile| Send Message|
( followers)  
E*Trade (NYSE:ET) has been kicking some serious butt as of late.

We're initiating coverage on the online brokerage, which reports earnings later today, with a strong buy rating.

Our investment thesis is based on three upside drivers.

One, E*Trade is rapidly gaining market share. We believe that this is resulting from a confluence of sound acquisition initiatives and increased advertising for its rapid execution trades.

Two, given its operating synergies, we believe that E*Trade is itself a viable acquisition target. The overriding trend in online brokerage points to consolidation, and E*Trade's competitive position is certainly strong, arguably second to that of Ameritrade (NYSE:AMTD).

Lastly, on a valuation basis, E*Trade is not expensive.

It is not unreasonable to think that the company could fetch 22 - 25 X forward results given its earnings growth, expanding market influence, and diversified business model (brokerage, lending, and banking).

In short, a valuable franchise like E*Trade could see $25 before it sees $20.

« Any opinions expressed on the Seeking Alpha sites are those of the individual authors and do not necessarily represent the opinion of SeekingAlpha or its management. »

Source: After the Close: E-Trade (ET)