Northland Securities Lowers TD Ameritrade (AMTD) EPS Estimate

Northland Securities analyst Mike Grondahl reiterated his Under Perform rating for shares of TD Ameritrade Holding Corporation (Nasdaq: AMTD) and lowered his EPS estimate for the 2nd quarter of 2010 from 29 cents to 24 cents.

Grondahl observed that February client trading volume at TD Ameritrade Holding Corporation was down 18% to 347,000 trades per day from 421,000 trades per day in January.

Because of the lower trading volumes, coupled with low interest rates, TD Ameritrade Holding Corporation profits will continue to be under pressure, leading to the analyst lowering his EPS estimate.

The Northland Securities analyst wrote, "in covering AMTD since the summer of 2009, our underperform rating and thesis has primarily been that interest rate pressures on money market balances and margin balances still faced a significant headwind and thus these revenues would be weaker than expected. While this situation continues, we acknowledge it might be in the latter innings. In addition, we noted trading volume or activity was at what seemed to be elevated levels, especially over the last year or so. In this note, we attempt to drill down on trading volume at AMTD to get a better sense of what FY 2010 earnings might be. We note trading activity is approximately 50% of revenue mix at AMTD. Of all the online brokers AMTD is the most leveraged to trading volume."