Zacks Investment Research upgraded shares of E*TRADE Financial Corporation (ET) from NEUTRAL to OUTPERFORM on November 13, 2013, with a target price of $21.00.
We are upgrading our recommendation on E*TRADE to Outperform based on strong third-quarter 2013 earnings. Though results were in line with the Zacks Consensus Estimate, it improved significantly from the net loss reported in the prior-year quarter. A rise in total daily average revenue trades (DARTs) and prudent expense management were the positives for the quarter. Moreover, decrease in provisions and a strong capital position were the tailwinds. However, reduced revenues remain a matter of concern. Though E*TRADE's initiatives to reduce balance sheet risk look promising, it will exert near-term pressure on the margins. Decrease in expenses reflects the company's successful cost reduction initiatives. Further, E*TRADE's decision to focus on core operations and exit the market making business is expected to improve profitability.
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