UBS analyst Brennan Hawken upgraded E-Trade Financial to Buy from Neutral with a price target of $41, down from $45.
The stock closed Friday up 75c to $36.40.
While the company's earnings power has "clearly been diminished" by the trading commission price cuts, its customer value proposition has improved relative to peers, Hawken tells investors in a research note. E-Trade has a leading corporate services offering an active trader platform, yet the stock is trading at a wider discount to peers than its five-year average, adds the analyst.
As a result, Hawken believes the stock offers the "most compelling path to value creation among the discount brokers."
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