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Eyeing E*Trade Financial in the Fannie and Freddie aftermath |
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| Sep 11, 2008 08:18 PM UTC |
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Tracked Blogger
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Via BloggingStocks:
Filed under: Analyst reports, Bad news, Stocks to Sell, E*TRADE (ETFC)  Online brokerage firm E*Trade Financial Corporation (NASDAQ: ETFC) hasn't escaped the financial-sector pain this week. The shares plunged 4.7% on Wednesday after E*Trade warned that it expects three-year cumulative losses on its home-equity portfolio to exceed the top end of its previously forecast range of $1 billion to $1.5 billion. Additionally, the firm confessed that its total pretax realized loss on its preferred equity holdings in Fannie Mae and Freddie Mac amounted to $150 million, net of hedges, for the third quarter.
In response to the news, Fox-Pitt Kelton widened its third-quarter loss estimate for E*Trade. The analysts now expect a per-share loss of 42 cents rather than 27 cents. In comments accompanying the revised outlook, Fox-Pitt noted that ETFC's efforts to patch up its damaged balance sheet haven't been sufficient to eliminate doubts regarding its home-equity line of credit losses. Yesterday's headlines probably came as an unpleasant surprise to the new crop of ETFC bulls. The International Securities Exchange (ISE) is experiencing a surge in call volume on the stock, which has now racked up a 10-day call/put ratio of 6.51 on the exchange. In other words, traders have purchased about 6.5 calls to open on ETFC for every 1 put during the past couple of weeks. Continue reading Eyeing E*Trade Financial in the Fannie and Freddie aftermath Permalink | Email this | Comments
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