TD Ameritrade's (NASDAQ:AMTD) Earnings Power on Upward Trajectory

Citing the 25 percent earnings increase over the previous quarter, Barclays said they see TD Ameritrade's (NASDAQ:AMTD) continuing on an upward trajectory.

Barclays noted, "Evidenced by the 25% gain in quarterly EPS vs. the prior quarter, we believe that AMTD's earnings power remains solidly on an upward trajectory as trading volumes have rebounded from seasonal lows, interest rate pressures appear to have crested, and the firm's net new asset growth rate remains at peer-leading double-digit annual rates. Supported by these organic and environmental tailwinds, we have increased confidence in our 2011 EPS estimate ($1.10) and believe that our new 2012 EPS estimate ($1.40) is a good starting point, depending on the aggressiveness of the firm's efforts to extend the IDA portfolio for higher yields and strategic deployment of its cash (likely dividends, buybacks and/or acquisitions).

"On that basis, we are not surprised to have seen the shares rise meaningfully over the last several months, up 45% since the end of August (vs. 23% gain in the S&P500). While we continue to recommend AMTD shares on a relative basis vs. our coverage for long-term investors, we believe the momentum of the rise may begin to slow, especially if Toronto Dominion (NYSE: TD) begins to unwind some of the excess above 45% limit that it currently has, potentially directly to AMTD as it still has a sizeable buyback program that did not get exercised to the degree it had hoped to due to the rise in the share price."

Barclays reiterates an "Overweight" rating on TD Ameritrade (AMTD), which closed Wednesday at $20.95, dropping $0.21, or 0.99 percent. Barclays raised their price target on TD Ameritrade from $20 to $22.