UPDATE: Compass Point Upgrades E*Trade Financial

In a report published Friday, Compass Point analyst Michael Tarkan upgraded E*Trade Financial (NASDAQ: ETFC) to Buy from Neutral, raising price target to $25.00 from $16.00.

According to the report, the upgrade follows the company's reported 4Q13 earnings, highlighted by strong core brokerage activity, lower provisions, and a second consecutive cash dividend to the parent company.

“Although shares have outperformed over the past 12 months, we see further upside as the company appears to have finally shifted from playing defense to offense, taking advantage of an improving retail environment and housing market,” the report noted. “In addition, unlike its other broker peers, the company can meaningfully improve EPS without another leg up in interest rates as its newfound capital flexibility should permit accretive debt paydown in late 2014. Longer term, we believe E*TRADE remains a takeout candidate given its strong brokerage franchise and as its legacy loan portfolio continues to shrink.”

ETFC closed Thursday at $21.04 with shares trading down a 2.19 percent.