Back to top

Analyst Blog

In a bid to increase its customers’ access to U.S. IPO and follow-on equity offerings, E*TRADE Financial Corporation (ETFC - Analyst Report) entered into a retail alliance with investment bank Jefferies LLC – a fully-owned subsidiary of Leucadia National Corporation . Through this agreement, E*TRADE customers will gain access to Jefferies’ underwritings of IPO and follow-on equity offerings.

With the aforementioned agreement, E*TRADE is looking to entice investors by offering assurance of access to IPOs that brokerage firms usually reserve for their eminent clientele. Most brokerage firms generally provide access to fresh issues of a newly traded company to favored institutions and affluent clients.

However, with this deal, E*TRADE offers its customers the opportunity to participate in a Jefferies offering if they conform to certain conditions and offer bids to buy at the offering price or higher.

E*TRADE is still recovering after an almost-fatal venture into mortgage lending prior to the 2008 financial crisis. The company’s efforts to reduce balance sheet risk appear to be promising in the long term. Also its decision to focus on core operations and exit the market making business during 2013 is expected to improve profitability further.

Notably, the brokerage firm ended 2013 with 3.0 million brokerage accounts, up 3% year over year. E*TRADE’s expertise as a primary brokerage firm is expected to be a foil for Jefferies’ Equity Capital Markets platform. The agreement is expected to help Jefferies in providing corporate clients with better service.

Even though benefits from such retail alliances in the past has been below expectations for other firms, we believe, it will be a significant top-line growth driver for E*TRADE, as there will be significant rise in the volume of equity offerings available to its clientele.

E*TRADE currently carries a Zacks Rank #2 (Buy). Some better-ranked investment brokerage firms include Investment Technology Group Inc. (ITG - Snapshot Report) and LPL Financial Holdings Inc. (LPLA - Snapshot Report), both carrying a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
GILEAD SCIE… GILD 102.87 +2.06%
PIPER JAFFR… PJC 54.54 +1.70%
WILLDAN GRO… WLDN 11.71 +1.65%
INTEL CP INTC 35.05 +1.59%