Citi Initiates Coverage On TD Ameritrade

Citi Investment Research is initiating coverage on shares of TD Ameritrade Holding Corp. AMTD with a $21 price target and a Hold rating. In a note to clients, Citi Investment Research writes, "While both AMTD and SCHW offer pronounced interest-rate-led NIM, EPS, and ROE expansion, such leverage continues to get delayed, and investors may be fatigued on this thesis ST. Our valuation analysis also suggests both stocks may still be discounting ~75 bps of rate leverage. In turn, EPS visibility through 2012 is low, DART/DAT activity is soft(ening) as retail investors generally remain on the sidelines; NIM prospects are flattening; and “Street” expectations have not yet fully reset to the new economic realities – we expect relatively tepid post C1Q conference calls in mid July. As such, we see both stocks range bound ST. That said, once the rate leverage theme reignites and/or trading dynamics step up more meaningfully, we see both AMTD and SCHW performing well, but with a particularly transparent Fed, we think investors can remain tactically cautious." Shares of AMTD lost 23 cents yesterday to close at $19.65, a loss of 1.16%.