Goldman Breathes As E*TRADE Begins To Take Shape

Goldman Sachs has published a research report on E*Trade Financial Corporation ETFC after the company presented new strategies for the future. In the report, Goldman writes "ETFC CEO Steven Freiberg presented a new corporate strategy for ETFC today and, while not a simple list of target ideas, the strategy focuses on ETFC's strengths – robust brand, solid brokerage, mix of businesses – to offset other shortcomings. In addition, with the release of November DARTs (+9% mom) and our economist's view that short term rates do not rise in 2012, we adjust our estimates to $0.08/0.65/1.15 from ($0.02)/0.60/$1.25. We group E*Trade's corporate strategy into four key pillars: Improve the core: stabilize client attrition sub 10%, enhance marketing message to attract new clients/assets, grow margin loans through a direct focus on drivers, launch online/mobile applications to extend product set, and focus on client services to improve promoter scores. Organic growth: build sales force by 35% to monetize inbound call volume and drive lead generation. Expand annuitized product set to get more managed portfolios and UMA/SMA accounts. Improve hit rate of unique visitors to website through innovative web strategy. Leverage secondary segments: Improve stock plan admin yield above 25-30% to drive higher gross new accounts. Take advantage of expiration of market making flow agreement to build business. “Asset” management: maintain interest earning assets of $40 bn, drive cash to the brokerage versus the bank, segment loan portfolio and positively focus on good bank loans/clients." Goldman Sachs maintains its Buy rating and $17 price target. E*TRADE Financial Corp. closed yesterday at $15.82.