Citi says "Buy" E*TRADE shares, Really?

E*TRADE (NASDAQ:ETFC) won the Largest Short Interest Increase last month, yet an analyst at Citigroup (NYSE:C) thinks now is the time to get in and upgraded ETFC shares to buy and increased their target price by 53% -- come on?

As WallStNation.com pointed out last week, E*TRADE (NASDAQ:ETFC) won the Largest Short Interest Increase last month and their short float is now hovering around 36%.  Citi could be fueling a short squeeze rally raising its rating to 'Buy' from 'Hold' and raised its target to $2.30 from $1.50.  As 247WallSt.com pointed out, E*TRADE shot itself in the foot after this Holy Mary Pass Upgrade from Citigroup:

The analyst who upgraded E*TRADE Financial Corporation (NASDAQ: ETFC) over at Citigroup is probably not feeling about as compared to about an hour ago.  Citi raised its rating to BUY from Hold and raised its target to $2.30 from $1.50.  This had shares marked up higher as per our “Volume Spike” alert service.  But then at 9:20 AM EST, a headline hit saying that E*TRADE had terminated its stockholder rights plan and filed for an ATM (at-the-market) program to issue common stock.  This is on the heels of the announced CEO departure last week.
E*TRADE entered into an equity distribution agreement with Sandler O’Neill + Partners, L.P. to offer and sell up to $150,000,000 of common stock through the ATM program from time to time. The online brokerage firm intends to use the proceeds to boost liquidity for the parent company and for working capital and general corporate purposes.
The sale process is expected to take place in the open market when and where Sandler O’Neill decides is best.  Interestingly enough, the firm is able to buy shares as principal for its own account.
The stock had been up north of $1.80 before the news hit the tape.  Now shares are up ‘only’ 4.8% at $1.74 on right at 50 million shares.

With friends like Citi, does E*TRADE really need any help?  Best of luck playing this stock, if you're not equipped to handle volatility, run from ETFC.

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