On Thursday, Citi maintained a Buy rating on LPL Financial Holdings (NASDAQ:LPLA), while increasing the stock's price target to $310 from the previous $285. The adjustment follows LPL Financial's reported third-quarter earnings, which surpassed expectations with an adjusted EPS of $4.16, against the estimated $3.70 to $3.72.
The firm's gross profit was reported at $1.13 billion, exceeding the anticipated $1.1 billion, thanks to robust performance in client cash and advisory services. Furthermore, core general and administrative expenses were lower than expected, coming in at $359 million compared to the forecasted $379 million.
LPL Financial also demonstrated strong recruiting trends during the quarter, with $26 billion in recruited assets. The net new assets (NNA) totaled an impressive $27.5 billion, or $33 billion excluding planned separations. This figure indicates an organic NNA growth of 9%, which is considered stronger than anticipated.
Additionally, LPL Financial increased its EBITDA guidance for Atria and Pru by $10 million due to higher asset growth. The company's cash balances were also reported to be better than expected. Another positive development highlighted by the analyst was the incremental cash (ICA) yield outlook, which is projected to be 5 basis points higher sequentially for the fourth quarter of 2024.
Overall, the analyst views the third quarter as a strong performance period for LPL Financial, with several positive surprises contributing to the improved outlook and the raised price target.
In other recent news, LPL Financial has witnessed significant changes in its corporate landscape. The firm has appointed Rich Steinmeier as the Chief Executive Officer and expanded Matt Audette's role to President in addition to his position as Chief Financial Officer. These changes come on the heels of the termination of former CEO Dan Arnold due to a breach of the company's code of conduct.
LPL Financial's earnings estimate for 2025 has been slightly reduced to $18.47, as reported by TD Cowen, which also raised the company's price target to $277. Wells Fargo (NYSE:WFC) has shifted its rating on LPL Financial from an Equal Weight to an Overweight, increasing the price target to $285. BofA Securities also adjusted its price target for LPL Financial to $274, citing potential for share buybacks following the forfeiture of Arnold's outstanding equity awards.
In terms of mergers and acquisitions, LPL Financial has announced an agreement to acquire The Investment Center, Inc., a move expected to enhance its service offerings and strategic growth efforts. The acquisition is anticipated to close in the first half of 2025. These are the recent developments that investors should be aware of.
InvestingPro Insights
LPL Financial Holdings' (NASDAQ:LPLA) strong third-quarter performance is further supported by recent InvestingPro data and tips. The company's market capitalization stands at $21.35 billion, reflecting its significant presence in the financial services sector. LPL's revenue growth of 16.49% over the last twelve months aligns with the robust performance noted in the earnings report, particularly in client cash and advisory services.
InvestingPro Tips highlight that LPL has maintained dividend payments for 13 consecutive years, demonstrating financial stability and commitment to shareholder returns. This is particularly noteworthy given the company's strong performance and increased EBITDA guidance mentioned in the article. Additionally, LPL is trading near its 52-week high, with a price at 97.91% of its 52-week peak, reflecting investor confidence in the company's recent results and future prospects.
The company's profitability is underscored by its adjusted operating income of $1.65 billion and an operating income margin of 15.06% over the last twelve months. These figures support the article's mention of LPL's earnings surpassing expectations and its strong performance in various business segments.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for LPL Financial Holdings, providing deeper insights into the company's financial health and market position.
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