This is from Briefing.com:
E*TRADE GROUP INC (EGRP) 24 -2 15/16. The reactions to online broker E*Trade's 2nd qtr earnings report are quite mixed. On one side of the Street is Raymond James which believes the quarter was decent and that near-term prospects are rosy. As a result, the firm reiterated its "buy" rating on the stock. Having a completely different take on the report is Deutsche Morgan Grenfell, which has lowered its investment rating on the company from a "buy" to an "accumulate." As most of you know, there is more to a quarter than simply being able to meet Wall Street earnings expectations: revenue growth, margins, and days of sales outstanding are just of a few of the numbers that are used by the investment community to determine what a company's prospects may be over the near- to intermediate-term. In EGRP's case, several analysts are calling the company's top-line growth disappointing and its transaction and commission revenue weaker-than-expected. For example, according to CS First Boston, EGRP's revenue from stock commissions came in about $2 million below its estimate, while sequential transaction volume improved just 1.4%, far short of the firm's 7.5% forecast. However, Raymond James analyst Phil Leigh is not as concerned. He views the company's ability to meet published earnings estimates despite increased marketing and promotional activities from competitors as impressive. In the 2nd-half of the year, Mr. Leigh believes that competitors will reduce the intensity of these campaigns, while EGRP ups its efforts. Based on an expected increase in marketing and promotional spending, the analyst trims his FY98 estimate by 3 cents to $0.66 a share. For 1999, he sees earnings of $0.95 a share. Mr. Leigh's 12-month price target of $40 per share suggests upside of 67%.
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My thinking was more like Mr. Leigh's, however it's hard for me to imagine the stock doing anything other than drift slightly up and down until next quarter's results. |
