While the goal for MF Global (NYSE:MF) to generate double-digit growth by the middle of 2012 appears to have potential, they must execute it if they're going to meet their target.
Ticonderoga said, "Recently, we sat down with MF CEO Jon Corzine. We walked out of the meeting more confident in the company's strategic direction and the ability of MF to meaningfully improve profitability moving forward. Management's goal of double-digit returns in 4-6 qrts., which is mid-2012, appears doable, providing the company executes. So far, we believe that MF is executing well, showing visibly improving compensation ratios and growing client balances, giving us confidence that our street-high 2012 estimate of $0.79 (with a 12% ROE, a 15% ROE would push EPS > $1.00) is doable and could be conservative...Principal trading rollout just getting started...Client balance growth raises capital questions, but represents positive earnings growth...After factoring in capital costs, we estimate every $1b in client credit balances generates -$9m in net revenues before we even consider associated trading volumes and commissions (or a higher rate cycle)."
MF Global closed at $7.69 Tuesday, falling $0.38, or $4.71 percent. Ticonderoga has a price target on the brokerage firm of $10.50 a share. They maintain their "Buy" rating on them.
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