UPDATE: Compass Point Initiates TD Ameritrade at Neutral; Earnings Levered to Interest Rates
Compass Point initiated coverage on TD Ameritrade (NYSE: AMTD) with a Neutral rating and a $17 price target.
Compass Point commented, "TD Ameritrade's strong organic growth and capital activity set it apart from its online broker peers, but the company's earnings remain primarily levered to interest rates, and absent any meaningful, sustainable improvement, EPS growth and AMTD shares will likely remain relatively muted, in our view. That said, despite a challenging retail environment, we fully expect top-tier asset gathering to continue, and revenues could benefit from increased volatility around January's fiscal cliff deadline. Furthermore, management has historically been active in returning capital to shareholders, and although buyback activity may be slowing, we expect continued cash flow generation to provide flexibility to pay a special dividend or become more aggressive through M&A later on."
TD Ameritrade closed at $15.41 on Thursday.
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