24 April 2006

S&P Upgrades TD Ameritrade

TD Ameritrade : Ups to 4 STARS (buy) from 3 STARS (hold)
S&P, Robert Hansen, CFA, 24 April 2006

The company's March quarter operating EPS of 22 cents vs. 17 cents is below our 25 cents estimate. We were disappointed with its results and guidance, given stronger trading volumes and increased margin rates. But, we view favorably TD Ameritrade's cutting of its commission rates given competitors' price cuts, as we think this will help the company grow market share. We are lowering our fiscal year 2006 (ending September) EPS estimate to 85 cents from 95 cents. But we are raising our target price to $23 from $22, 27 times our fiscal year 2006 estimate. Despite our view of competitive challenges, we think shares are attractive following recent weakness.