UPDATE 1-RESEARCH ALERT-Analysts cut estimates for E*Trade

NEW YORK, Nov 30 (Reuters) - Three analysts cut their earnings estimates for E*Trade Financial Corp (ETFC.O) on Friday, citing the high costs and dilutive terms of a bailout deal between the online brokerage and Citadel Investment Group.

Goldman Sachs said the deal increases E*Trade's share float by about 20 percent and adds $219 million in interest costs tied to a $1.75 billion senior note and stock issue. It also cited a fall in E*Trade's client asset levels and lower growth prospects.

Credit Suisse cited the weaker outlook for brokerage operations and the dilutive terms of the deal, while Sandler O'Neill cited "a higher share count, higher debt expense, and lower net interest income."

Goldman Sachs analyst William Tanona lowered his 2007 earnings estimate to a loss of $2.62 per share from a profit of 42 cents. He cut his 2008 estimate to nil from a profit of 90 cents per share.

For 2009, Tanona lowered his estimate to 40 cents a share from $1.20, according to a research note.

Credit Suisse said it was reducing its target price for E*Trade shares to $4 from $10.

In a research note, Credit Suisse analyst Howard Chen lowered his fourth-quarter earnings estimate to a loss of $2.50 per share from a profit of 5 cents, and cut his 2008 estimate to 20 cents per share from $1.10. For 2009, he initiated an estimate of 30 cents per share.

Sandler O'Neill analyst Richard Repetto said he was maintaining a "hold" rating on E*Trade, and lowered his earnings estimates and price target. For the fourth quarter, he forecast a loss of $3.21 per share, compared with an earlier loss estimate of a 14 cents.

For 2007, he cut his estimate to a loss of $2.69 per share from a profit of 54 cents. For 2008, the estimate was cut to 49 cents per share from $1.30. The price target for E*Trade shares was lowered to $5 from $9.

The shares were down 8 cents to $4.74 in morning Nasdaq trade. (Reporting by Lilla Zuill; Editing by John Wallace)