LPL Financial stock rating reinstated as Buy at Goldman Sachs

Investing.com - Goldman Sachs reinstated coverage on LPL Financial Holdings (NASDAQ:LPLA) with a Buy rating and a price target of $405.00 on Friday. The target aligns with the broader analyst consensus, as targets currently range from $400 to $504, according to InvestingPro data.

The firm cited LPL’s underperformance relative to peers since announcing the Commonwealth Financial Network acquisition, with the stock up only 4% compared to peers’ 15%-20% gains and the S&P 500’s 16% increase.

Goldman Sachs believes concerns about near-term EPS dilution from the deal, slower net new asset growth, and headwinds from lower interest rates are now heavily discounted in LPL’s valuation, which stands at 12X P/E on 2027 consensus estimates versus its 3-year historical average of 14.5X. Currently trading at a P/E of 23.55x, InvestingPro’s Fair Value analysis suggests the stock is slightly undervalued, with additional insights available in the comprehensive Pro Research Report.

The firm forecasts a 20% EPS CAGR from 2025-2027 as Commonwealth is incorporated, projecting $515 million in EBITDA contribution by 2027, exceeding management’s guidance of $415 million.

Goldman Sachs expects LPL’s P/E multiple to return to historical levels, supported by deleveraging, resumed share repurchases, improved net new asset growth, and potential upside from cash sweep balance growth and the launch of SBL products.

In other recent news, LPL Financial reported its second-quarter earnings for 2025, which exceeded analysts’ expectations. The company achieved an adjusted earnings per share (EPS) of $4.51, surpassing the forecasted $4.24. However, LPL Financial experienced a revenue shortfall, posting $3.84 billion against a projected $3.76 billion. In a strategic move, a team of six advisors from Skyward Financial, managing approximately $700 million in assets, has joined LPL Financial’s broker-dealer and Registered Investment Advisor platform. Additionally, Citizens JMP has reiterated its Market Outperform rating for LPL Financial, setting a price target of $440.00. The firm considers LPL a compelling investment opportunity, noting its shares trade at about 16.5 times the 2026 earnings per share estimate. Meanwhile, GTCR has completed its acquisition of FMG Suite, with former LPL CEO Mark Casady joining as Executive Chairman to drive strategic growth. These developments reflect ongoing strategic and financial activities within LPL Financial and related firms.

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