Ladenburg Thalmann Financial Services Inc., which owns three sizable independent broker-dealers, stands to benefit from long term trends such as the increase in the number of Baby Boomers retiring and advisers leaving large financial institutions.
That's the conclusion of Barrington Research Associates Inc. equity analyst Alexander Paris Jr., who started covering Ladenburg Thalmann on Wednesday and gave it a rating of “outperform” and a $2.25 per share stock price target.
Shares of Ladenburg Thalmann, which has bought all three of its IBDs since 2007, were trading at $1.34 on Friday afternoon.
“Given the appealing growth profile of the independent brokerage and advisory business (driven by the graying of America, the retirement of the baby boomers, and more individuals' taking control of their investment portfolios) as well as the steady migration of client assets and advisers from the large national firms (such as wirehouses, insurance and bank channels) to the independent channel, revenue growth should accelerate and become more predictable,” Mr. Paris wrote.
“It appears there is a secular shift in financial services as the industry is experiencing an increase in the number of independent financial advisers at independent broker-dealers, and financial advisers are leaving the large financial institutions,” he noted. “This favors firms like Ladenburg, which is well positioned to benefit from this trend.”
Another highlight is the fact that billionaire investor Phillip Frost owns 35% of Ladenburg Thalmann, Mr. Paris noted.
Ladenburg Thalmann spokesman Jonathan Doorley declined to comment on the Barrington report.
The company owns three broker-dealers: Securities America Inc., which it bought in 2011, Triad Advisors Inc., acquired in 2008, and Investacorp Inc., purchased in 2007. More than 2,700 financial advisers are affiliated with those three firms.