On Monday, Jefferies maintained a Buy rating on shares of LPL Financial Holdings (NASDAQ:LPLA) and raised the price target to $334 from the previous $322. This adjustment comes even as the firm lowered its second-quarter earnings estimate for LPL Financial from $3.78 to $3.61.
The revision was based on a decrease in total cash balances, which fell from $46.3 billion as of March 31 to $44.4 billion at the end of May, impacting net interest income (NII).
The average interest-earning cash balance for the quarter was also revised down from $32.2 billion to $31.8 billion. Consequently, the expected ICA yield is anticipated to drop quarter-over-quarter from 323 basis points to 319 basis points, marginally below the management's guidance of a "decrease by a few bps sequentially."
Client cash revenue projections for the quarter have been adjusted to $357 million, a decrease from $373 million in the first quarter of 2024. Transaction revenue also experienced a quarter-over-quarter decline of $2 million, aligning with previous guidance. Increased interest expenses were cited as another contributing factor to the reduced earnings per share (EPS) forecast for the quarter.
Looking ahead to the full fiscal year 2024, Jefferies has revised the EPS forecast for LPL Financial to $15.71, down from the earlier projection of $16.09. Despite these revisions, the firm's outlook on the stock remains positive, as reflected in the upgraded price target.
In other recent news, LPL Financial Holdings disclosed its financial metrics for April, which aligned with their first-quarter results for 2024. The company showcased robust client cash balances and flow metrics, outperforming many competitors in the industry.
TD Cowen maintained a Hold rating on shares of LPL Financial, with a consistent price target of $271.00, reflecting the firm's assessment of LPL Financial's value based on these metrics.
In the first quarter of 2024, LPL Financial reported significant growth in assets and successful recruitment of new assets, reaching a record high. The company's adjusted earnings per share (EPS) for the quarter was $4.21.
Strategic initiatives included the onboarding of wealth management businesses from Wintrust Financial (NASDAQ:WTFC) and Prudential Financial (NYSE:PRU), the planned acquisition of Atria Wealth Solutions, and the launch of new services.
These recent developments show LPL Financial's focus on maintaining its financial health and growth prospects. The company's strategic plans, coupled with its strong financial performance, underline its potential for continued success in the financial services sector.
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