E*TRADE To BlackRock: Here Are Barclays' New Favorite Financials

Barclays recently initiated coverage on more than a dozen financial sector stocks. The firm was mostly bullish on the space, with a handful of exceptions. Here’s a breakdown of what Barclays had to say.

Brokers, Asset Managers And Exchanges

Analyst Jeremy Campbell has a Neutral overall rating on brokers, asset managers and exchanges stocks. Campbell is calling for little change in the industry over the next year, anticipating solid market returns, growth in volume and higher interest rates.

Campbell named Charles Schwab Corp SCHW as the best overall online broker stock, while E*TRADE Financial Corp ETFC’s future will hinge on mergers and acquisitions.

Overall, Barclays is negative on asset managers, but Campbell said BlackRock, Inc. BLK and Invesco Ltd. IVZ are exceptions.

Related Link: Washington News Overrides Q2 Big Bank Earnings Reports

Consumer Finance

In the consumer finance space, analyst Mark DeVries said business development companies delivered mostly in-line numbers in the second quarter, but management commentary tended to be cautious. DeVries expects the environment to remain challenging, but noted that higher interest rates could help. Overall, Barclays maintains an Equal Weight rating on BDCs. DeVries said the highest-quality names are already trading at a valuation premium to their peers, leaving little room for upside. He mentioned Ares Capital Corporation ARCC as one high-quality exception that trades at a price-to-book ratio of only about 1.0.

Initiations

In the note, Barclays initiated coverage on and set new price targets for 13 financial stocks:

  • BlackRock: Overweight rating, $475 price target
  • CBOE Holdings, Inc CBOE: Equal-Weight rating, $105 price target
  • CME Group Inc CME: Overweight rating, $139 price target
  • E*TRADE: Overweight rating, $45 price target
  • Financial Engines Inc FNGN: Overweight rating, $38 price target
  • Franklin Resources, Inc. BEN: Underweight rating, $40 price target
  • Intercontinental Exchange Inc ICE: Overweight rating, $72 price target
  • Invesco: Overweight rating, $38 price target
  • Legg Mason Inc LM: Equal-Weight rating, $39 price target
  • Nasdaq Inc NDAQ: Overweight rating, $85 price target
  • T. Rowe Price Group Inc TROW: Overweight rating, $85 price target
  • Charles Schwab: Overweight rating, $48 price target
  • Virtus Investment Partners Inc VRTS: Equal-Weight Rating, $113 price target

Related Link: Yellen Puts A Crimp In Financial Rally

Posted In: BarclaysJeremy CampbellMark DeVriesAnalyst ColorLong IdeasPrice TargetInitiationAnalyst RatingsTrading Ideas