Friday, March 17, 2006

S&P Upgrades TD Ameritrade

TD Ameritrade Holding : Ups to 3 STARS (hold) from 2 STARS (sell)
S&P, Analyst: Robert Hansen, CFA

We are impressed by TD Ameritrade Holding's trading volumes in January and February, which significantly exceed our estimates. Furthermore, we think higher margin rates and relatively stable commission rates should benefit earnings per share (EPS) growth in fiscal year 2006 (ending September). Although trading volumes can be highly volatile, we think improving equity markets will benefit investor confidence. We are raising our fiscal year 2006 (ending September) EPS estimate to 95 cents from 90 cents. Our 12-month target price goes to $22 from $18, or about 23 times that estimate. Though we see improving fundamentals, we view the premium on TD Ameritrade Holding shares as appropriate.