Goldman and Citi going to Bat for E*TRADE

Despite the massive short interest in E*TRADE (NASDAQ:ETFC), Goldman Sachs (NYSE:GS) gave E*TRADE a new 'Buy' rating today.  It appears Goldman is following suit after Citigroup (NYSE:C) raised its target price on ETFC shares 53% on Monday.  Dare to trade against E*TRADE?  More importantly, dare to bet against Goldman?

Now that E*TRADE has received the thumbs up from Goldman and Citi, you can expect traders to come on swinging on existing E*TRADE positions.  This morning Goldman raised E*TRADE to Buy citing E*TRADE’s increasing trading data for the month. This is a big upgrade for E*TRADE, Goldman moved their rating from 'Neutral' to 'Buy' and raised their 6-month price target from $1.70 to $2.30. The firm cited improving trends in the bank and broker segments and the new price target is a 35% increase.

Goldman said, "With improving delinquency trends in the home equity line of credit portfolio and solid brokerage trends, E*Trade appears to have turned the corner in its performance and we estimate the shares have 35% upside from current levels." The firm also cited 10% probability to a potential take-out, which has increased in recent days as ETFC has signaled it will replace current CEO Don Layton.

THANK YOU CITI AND GOLDMAN
E*TRADE (NASDAQ:ETFC) won the Largest Short Interest Increase last month and their short float is now hovering around 36%.  Citi and now Goldman could be fueling a short squeeze rally for E*TRADE shareholders.  Citi raised its rating on E*TRADE Monday to 'Buy' from 'Hold' and raised its target to $2.30 from $1.50.

Take a wild guess who will benefit from this upgrade as shares are already up 5+% today?  That would be the 6th largest 'Institutional Holder' in E*TRADE:

Disclaimer: No positions in any of the securities mentioned in this publication.