Discount Broker Shares Mostly Rise On Analyst Note

BOSTON (AP) — Discount brokers shares mostly rose on Tuesday, with E-Trade Financial Corp. the exception after an analyst offered a mostly bullish outlook on the sector but said a recent rise in E-Trade's shares may have been overdone.

BMO Capital Markets analyst Michael Vinciquerra said in a research note that he doesn't share other investors' optimism about E-Trade shares because he believes any potential merger involving the company is a long way's off.

While calling E-Trade "an attractive merger candidate," Vinciquerra said he doesn't see potential buyers becoming interested "until the credit outlook has improved considerably. That's several quarters away yet, in our view."

ETrade shares have become "rich, if not overvalued," he said, after rising about 33 percent this month. He believes that the jump in its share price has been driven by E-Trade's recent moves to improve its capital position through a share offering and debt swap.

Vinciquerra said two rivals, Charles Schwab Corp. and TD Ameritrade Corp., won't consider buying E-Trade "until its mortgage book has shown significant and lasting improvement, and that's unlikely to be until at least midway through 2010 if not later."