E*Trade Stumbles After Earnings Fizzle Though Some Analysts Remain Bullish

E*Trade, which relies heavily on retail investors, sees a big, year-over-year drop in earnings.
Author:
Publish date:

Shares of E*Trade (ETFC) - Get Report slumped Friday after a disappointing earnings report, with one analyst suggesting the online trading platform could be an ideal acquisition target amid industry consolidation.

E*Trade's stock price fell 1.93% to $45.18 a share as investors digested the company's fourth-quarter earnings fizzle.

E*Trade reported earnings of 76 cents a share, falling short of forecasts that called for earnings of 81 cents.

The online trading company, which relies heavily on retail investors, posted earnings of $172 million, compared with $270 million, or $1.06 a share during the same period in 2018.

While revenue beat analysts' expectations, it also dropped to $679 million from $735 million in the fourth quarter of 2018 amid intense industry consolidation, with competitor Charles Schwab (SCHW) - Get Report, which is in talks to acquire TD Ameritrade (AMTD) - Get Report, slashing its trading fees.

In a research note, Raymond James' analyst Patrick O'Shaughnessy raised the possibility that E*Trade might make a tempting acquisition target for a bank.

The Raymond James analyst maintained his outperform rating on the online trading company's stock, with a price target of $50.

Also relatively bullish on E*Trade was Credit Suisse, which hiked its price target to $62, up from $60, implying a potential upside of more than 25%.

Meanwhile, Morgan Stanley analyst Michael Cyprys sees good news in E*Trade's big push into the registered investment advisory business for its competitor, Charles Schwab. As E*Trade ramps up its efforts to compete in this sector, it could ease federal antitrust regulators' concerns that Schwab's proposed acquisition of Ameritrade may be anticompetitive.