Retail broker E-Trade appears to have just lost the most recent battle in the brokerage wars.
"I think a bit of a surprise this morning in terms of the players," said Devin Ryan, managing director or equity research at JMP Securities. "The market wasn't anticipating the Schwab-Ameritrade combination, I think people were more looking at who would be buying E-trade."
Shares of Schwab are rose 7.3% and shares of TD Ameritrade soared 16.92% on Thursday.
While Goldman Sachs, who has been beefing up its retail banking business in recent years, CFO Stephen Scherr said in June that the bank would be active in so-called bolt-on acquisitions, a person with knowledge of Goldman's situation said it was unlikely they would purchase E-Trade.
"This will certainly put pressure on ETFC to find its own partner," said Don Bilson of Gordon Haskett research advisers in a note to clients on Thursday.
To be sure, E-Trade still looks like an attractive acquisition target as the company has a large deposits business, said Ryan.
"E-trade still would be attractive to both kind of the obvious firms out there, like Schwab or Ameritrade, or potentially others as well," said Ryan. "Consolidation makes sense today, I think it will make sense in the future." But Ryan said Schwab will have its "hands full for while," with the TD Ameritrade acquisition.
The reportedly $25 billion imminent deal between Schwab and TD Ameritrade will create a "Goliath in Wealth Management" according to Wells Fargo's Mike Mayo, with more than $5 trillion in combined assets. The industry consolidation came as no surprise to investors, following massive disruption in the space after all of the major brokers dropped commission fees in recent months.
While Goldman Sachs said it is an unlikely buyer, its not impossible another bank looking to beef up its retail business snatches up E-Trade. Especially as the broker's stock down nearly 20% in the past 12 months, which would give a buyer a major discount.
"With the obvious candidates now spoken for...ETFC could end up with someone who isn't necessarily an online broker," said Bilson.
Ryan of JMP said a bank that is pushing into consumer finance could benefit from E-Trade's very strong deposit base, which generates about $60 billion in deposits each quarter.
"A bank that is able to leverage that and generate stronger net interest income off of their customers, I think that could be quite attractive," said Devin Ryan, managing director or equity research at JMP Securities.
The downside to an acquisition from a bank is less "expense synergies" than there would be from a merger with a traditional broker, said Ryan. The advantage to the Schwab-TD Ameritrade deal is the brokerage giant will be able to cut costs and stream new revenue opportunities. There will also be an opportunity to improve the platform for clients.
"Given the high amount of overlapping back-office operations and vendor costs, we would expect to see about 60% of AMTD's costs removed," said Stephen Biggar, Argus Research Director of Financial Institutions Research. Merging with a giant bank would remove some of those cost-cutting advantages.
What most of Wall Street agrees on is E-Trade needs to make some sort of deal.
"Over time, if firms are left out, it could create some pressure on those stocks, and as the distribution platforms become larger, it could also create a bit more pressure for the asset management industry," said Bank of America research analyst Michael Carrier in a note to clients on Thursday.
E-Trade did not immediately respond to CNBC's request for comment.
Shares of E-Trade closed down 9.3% on Thursday, its worst day since Oct. 1.
—with reporting from CNBC's Hugh Son, Kate Rooney and Michael Bloom.