NEW YORK (TheStreet) -- JPMorgan upgraded E*Trade Financial to "outperform" from "market perform" and set a target price of $26. The firm cited diminished risks and the company's ongoing recovery as reasons for the upgrade.
TheStreet Ratings team rates E TRADE FINANCIAL CORP as a Hold with a ratings score of C+. The team has this to say about their recommendation:
"We rate E TRADE FINANCIAL CORP (ETFC) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we find that revenues have generally been declining."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
E TRADE FINANCIAL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, E TRADE FINANCIAL CORP turned its bottom line around by earning $0.29 versus -$0.39 in the prior year. This year, the market expects an improvement in earnings ($0.82 versus $0.29).
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 131.1% when compared to the same quarter one year prior, rising from -$186.06 million to $57.86 million.
Despite the weak revenue results, ETFC has outperformed against the industry average of 14.8%. Since the same quarter one year prior, revenues slightly dropped by 3.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, E TRADE FINANCIAL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
Powered by its strong earnings growth of 130.76% and other important driving factors, this stock has surged by 104.27% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
You can view the full analysis from the report here: ETFC Ratings Report
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