Analysts Bullish Following TD Ameritrade's Impressive Q1 Earnings

The market had a muted reaction to TD Ameritrade Holding Corp. AMTD earnings after the company reported better-than-expected EPS and 21 percent revenue growth in the most recent quarter. Expenses were down 2 percent, and adjusted operating margins were 54.6 percent on the quarter.

Wall Street analysts were mostly bullish on the quarter and are also optimistic about the outlook for TD Ameritrade shares. Here’s a sampling of what they had to say following the report.

Organic Growth

Bank of America analyst Michael Carrier said 10 percent organic growth in net new assets was one of a number of positives in TD Ameritrade’s report.

“Overall, a solid quarter, and given a mostly favorable outlook, active expense/capital management, conservative guidance, and an attractive valuation,” Carrier wrote in a note.

Bernstein analyst Christian Bolu said TD Ameritrade is off to a strong start for 2019, and he expects 2 percent to 4 percent upside to consensus EPS estimates over the next two years.

“AMTD posted a strong set of financial and operating results to start FY2019-top/bottom line beats, organic growth re-accelerating to 10% (record $32Bn in NNA), and 11 bps of BDA yield expansion (in part due to lower FDIC assessments) were highlights in the quarter,” Bolu wrote.

Upside Ahead

Morgan Stanley analyst Michael Cyprys said the 9 percent increase in BDA balances to $122.1 billion is a positive sign for Q1.

“We see upside to consensus estimates given the sharply higher end of period BDA balances implying a higher entry point for next quarter,” Cyprys wrote.

Raymond James analyst Patrick O’Shaughnessy said record net new assets coupled with top- and bottom-line beats is a winning recipe for TD Ameritrade investors.

“Relative to our model, lower than expected commission and transaction revenues were partially offset by higher net interest income and investment product fees,” O’Shaughnessy wrote.

Ratings And Price Targets

• Bank of America has a Buy rating and $58 target.
• Morgan Stanley has an Overweight rating and $59 target.
• Raymond James has an Outperform rating.
• Bernstein has an Outperform rating.

Shares traded at $54.32 Wednesday afternoon, down 1 percent.

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