E*Trade Capital Efforts May Lead to Sale

(Adds E*Trade comments in 19th graph.)

E*Trade Financial's (ETFC Quote) recent efforts to shore up its struggling bank subsidiary could pave the way for a future sale of the company, some analysts say.

Matt Snowling, an analyst at Friedman Billings Ramsey, says investors should start buying shares of the company and raised his rating to outperform on Tuesday.

"We believe the worst is now behind E*Trade, as the nearly $2 billion of fresh equity capital at the company should alleviate regulators' concerns and take the worst-case scenario off the table," Snowling writes in a note. "As a result of still strong fundamentals, good cash flow, and increased probability of becoming an acquisition candidate, we believe patient investors will be rewarded for stepping into [E*Trade] at current levels." ...