FBR found no reason to get positive on E*Trade (ETFC) after the online broker gave a dismal earnings announcement and outlook yesterday. Instead, the firm reiterates it thesis and says, although the firm may not go bankrupt, you should still avoid it:
Actions such as swapping debt for equity and the selling of its Canadian brokerage operations are raising much needed proceeds to capitalise the holding company/bank and reduce its debt burden. While this should ensure the survivability of the franchise, the added dilution and still-rising credit costs are enough to keep us on the sidelines. Furthermore, our concerns regarding a potential slowdown related to a financially stressed retail investor customer base adds another layer of uncertainty in our view.
FBR reiterates MARKET PERFORM on E*Trade Financial (ETFC), target $3.
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