E*Trade back on track, says analyst

E*Trade Financial Corp., which took a black eye from losses on its subprime mortgage holdings, is getting back on track by focusing on its roots as an online brokerage, an analyst said Monday. Keefe, Bruyette & Woods analyst Joel Jeffrey started coverage of E*Trade with a "Market Perform" rating and a 12-month price target of $1.70. Jeffrey cited E*Trade's improving loan portfolio. He also believes that the New York company's online brokerage business will be enough to support operations or attract a buyer. "The firm is returning to its brokerage-centric business model and appears to be on the path to recovery," the analyst said in a research note. However, Jeffrey said there are still drags on the business from E*Trade's banking operations. As such, Jeffrey told investors to expect only limited earnings-per-share increases in the near future.