CLSA said the recent CEO change at E*TRADE Financial Corp (NASDAQ: ETFC) suggests there is no sale of the company in the cards for the time being. The
firm reiterated its Outperform rating on the shares.
E*Trade unveiled several top-level executive changes Monday, including the ouster of Chief Executive Paul Idzik, who will be
replaced by Karl Roessner.
E*Trade also named Michael Curcio as chief brokerage officer. Curcio was recently chief executive of Aperture New Holdings, the
parent of derivatives-trading platform OptionsHouse (E*Trade bought OptionsHouse for $725 million in July). CLSA sees a shift in
marketing strategy with the appointment of new chief brokerage officer.
"Our view is that a sale of ETFC is no more likely following the CEO change and that the management changes seem to point to a
pivot from risk reduction to growth," analyst Rob Rutschow wrote in a note.
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After lagging peers TD Ameritrade Holding Corp. (NASDAQ: AMTD) and Charles Schwab Corp (NYSE: SCHW) in terms of growth, the company believes a 2–3 percent top-line growth rate
would be enough to generate earnings growth that would warrant remaining independent.
"A 2–3 percent growth rate seems a little low in the context of peer account growth and customer asset growth of 4–5 percent and
6–10 percent, respectively, and would really only match the 2.4 percent growth in brokerage accounts seen over the past 12 months.
However, concerns over top-line growth are clearly warranted," Rutschow noted.
At the time of writing, shares of E*Trade had gained 3.85 percent on the day to $28.29. The analyst has a price target of
$29.
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