Very bullish analysis from Briefing.com...
10:58 ET ******
E*Trade (EGRP) 28 5/8 +1 3/4: A drop in long-term rates, a friendly inflation report, and
the revival of the Internet stocks have all combined to give this online brokerage an added lift
today. Suffice it to say, E*Trade needs one as its stock has dropped 60% since reaching its
all-time high in early April. That fall from grace was driven by the jump in interest rates, a fear
of Fed tightening, and concerns the online brokerage industry had showed signs of slowing
growth in the second quarter as the number of trades processed per day was roughly that of
what was seen in the first quarter. Moreover, contentions that the group could see its first
sequential decline in trading volume in the third quarter simply added fuel to the fire. For
online trading services, a slowdown in trading volume can be murderous on top- and
bottom-line results. True, E*Trade derives the bulk of its revenues from trading activity, but it
hasn't been content to be just a financial portal for trading stocks as evidenced by its
acquisition of Clearstation.com, its definitive merger agreement with Telebanc (TBFC), and
its investments in E*OFFERING, and Archipelago. However, the company isn't shying
away from expanding its trading business either. To that end, E*Trade is looking to expand
its global reach, and plans to launch branded web sites in the top 20 financial markets
worldwide. As part of its global strategy, E*Trade announced last month the acquisition of
TIR Holdings, a Dublin-based company that will help it execute trades for international
clients. Nevertheless, E*Trade remains well aware that domestic opportunities abound as a
recent Gomez Advisors survey suggested the online investment crowd could increase by
two-thirds to 8.6 mln in the next six months. Looking to provide current and prospective
customers with the most opportunistic trading services, E*Trade announced this morning an
agreement with Instinet Corp. to provide after hours trading for its customers, beginning in
September, from 4:00 p.m. ET to 6:30 p.m. ET-- twice as long as its nearest competitor and
in equities on both the NYSE and Nasdaq. To be sure, a stock such as E*Trade, in its current form, will mirror prevailing market conditions, but material declines in the stock like the one we have witnessed recently present excellent, long-term (re)entry opportunities as it has become clear to Briefing.com that E*Trade is evolving into more than just a retail stock trading service and that its management has an undeterred focus on being a leader, and not a follower, in this competitive space. - PJO |
