Here's Why Goldman Sachs Removes TD Ameritrade From 'Americas Buy List,'

In a report published Friday, Goldman Sachs analyst Alexander Blostein downgraded shares of

to Neutral from Buy despite "lots of earnings per share upside." Blostein noted that shares of TD Ameritrade is trading near his $38 per share price target. At the same time, retail trading activity is trending "a bit softer" with a negative mix shift away from higher-commission options. "We continue to view TD Ameritrade as a secular asset gathering story (10 percent plus organic growth rate) within wealth management space, with lots of EPS upside in a higher rate environment and a more flexible capital structure versus its closest peers," Blostein wrote. "That said, with the stock now trading at 23x Next Twelve Months P/E, we estimate almost 150-200 basis points of interest rate upside is already reflected in the valuation, while the firm's near-term EPS backdrop is tracking modestly softer than expected." The analyst continued that the company's Daily Average Revenue Trades (DARTs) are down three percent year over year while

trends suggest DARTs in March would be down another six percent. Moreover, industry-wide options trading is down 12 percent year over year which could weigh on the company's commission revenue given it is a higher fee business. Bottom line, Blostein stated that he remains "constructive" on the long-term prospects, but sees "limited absolute" upside over the next six to 12 months.