Goldman Prefers TD Ameritrade (AMTD)

Goldman Sachs prefers TD Ameritrade AMTD in the discount broker space. In a note sent to clients Goldman writes, "We favor Buy-rated TD Ameritrade given asset aggregation success (10% growth in F2010 and a 7%-11% target in FY2011) and valuation relative to peers (17.8X vs. the peer average of 28.0X). The key variables in AMTD's $0.90-$1.20 FY2011 EPS guidance (GS: $1.10) are trading activity levels, US market performance, and NIM. Thus, our more cautious view on rates prompts us to reduce our FY2012-3 estimates to $1.45/1.90 from $1.60/2.00, however, we note our FY2012 estimate still implies 32% Y/Y EPS improvement." Shares of AMTD gained 1 cent yesterday to close at $18.62.