LPL aims to boost profit through Uvest integration

Mar 20, 2011 @ 12:01 am

By Bruce Kelly

LPL Investment Holdings Inc. expects to save up to $12 million next year by moving brokers in its subsidiary Uvest Financial Services Group Inc. to LPL's proprietary clearing platform.

The company announced the move last Monday in a statement. About 500 representatives and advisers are affiliated with Uvest, a broker-dealer that primarily serves financial institutions such as banks and credit unions.

“We expect this integration will improve our company's pretax profitability by approximately $10 million to $12 million per year, beginning in 2012, through operational efficiencies and revenue opportunities,” said Michael Herley, a spokesman for LPL.

Uvest currently clears its brokers' trades through Pershing LLC, the industry's biggest clearing firm.

One securities analyst likes LPL's move to consolidate operations.

In a note to clients, Citigroup Inc.'s William Katz said that such efficiency moves should increase pretax income by roughly 6 cents a share on an after-tax basis.

Citigroup is maintaining its earnings-per-share forecast for LPL in 2011 at $1.74 a share. But the bank is raising its earnings-per-share expectations for the broker-dealer by 6 cents to $2.20 a share next year.

“We are increasingly warming to the story and see the stock defensive to a further market correction,” Mr. Katz wrote in a note to clients. “However, we look for a better entry, given limited upside to our revised target and potentially aggressive consensus expectations.”

E-mail Bruce Kelly at bkelly@investmentnews.com.

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