E*Trade Up Again on Strategy Praise

E*Trade(ET Quote) rose for a fifth straight session Thursday after J.P. Morgan analyst Greg Smith said its recent acquisition binge should be about to pay off. Smith, who also cited an improving economic environment and an attractive valuation, raised his rating to buy from long-term buy Thursday and set a near-term price target of $12.

"At this point in time, we think E*Trade has reached a level of critical mass," wrote Smith in his note. "We think the heavy lifting in building its infrastructure is largely behind the company, which should cause margins to expand sharply without any significant revenue growth," he wrote. At the end of last year, the company had 4 million accounts and customer assets of $53 billion.

While the upgrade is not based on expectations for a surge in retail trading activity, Smith said investor confidence and retail trading volumes seem to have picked up in March. Continued strength in trading activity could be "the icing on the cake," he wrote. ...