Discount Brokers Shares Gain On Positive Trends

DES MOINES, Iowa (AP) — Shares of online discount broker E-Trade Financial Corp. surged upward Friday on an analyst upgrade that indicated the company should return to profitability in the fourth quarter.

E-Trade shares climbed 10 cents, or 6 percent, to $1.81.

Goldman Sachs analyst Daniel Harris upgraded the stock to "Buy" from "Neutral" to take advantage of better than expected brokerage trends and improving credit trends in the company's home equity loan book, he wrote in an investor note.

He said E-Trade's brokerage business has shown substantial growth and he boosted his earnings per share estimate to a loss of 3 cents in the third quarter from an earlier expected loss of 8 cents.

Among other discount brokers, shares of Charles Schwab Corp. fell 44 cents, or 2.5 percent, to $17.30.

Harris downgraded the stock from to "Sell" from "Neutral". He said two of Schwab's core revenue drivers, asset management and net interest income, will not grow very much because short-term rates aren't likely to improve. He expects Schwab to underperform peers.

Shares of TD Ameritrade Corp. rose 7 cents to $19.55 in morning trading.

Harris believes investors are re-engaging in the stock market through the more traditional asset gathering firms at some expense of niche firms such as TradeStation Group Inc. and optionsXpress Holdings Inc.

TradeStation shares rose 2 cents to $7.55 a share and optionsXpress climbed one cent to $17.25.