Citing LPL Financial's net new asset growth, recent business initiatives bearing fruit and other factors, one industry analyst, Steven Chubak, managing director at Wolfe Research, said he's keeping LPL Financial Holdings Inc., whose ticker symbol is LPLA, as a "top pick" this year.
"We are sticking with LPLA as one of our Top Picks for 2023, with a combination of best-in-class organic growth, commitment to positive operating leverage, strong buyback, and leverage optimization driving greater confidence in the ability of management to sustain long-term" earnings per share growth of greater than 20%, wrote Chubak, whose report, 2023 Outlook: No More Funding Around..., was published Wednesday.
Chubak wrote that he's "more cautious" on the large-cap banks in 2023, citing risks related to wavering net interest income, capital markets and credit. He covers a universe of 22 financial services companies, each with varying degrees of exposure to financial advisors and the wealth management industry.
Shares of LPLA were trading near $219 at noon Thursday, an increase of 27% in the past year. That's in comparison to the stock market's bad year, with the S&P 500 index down 19.4%.
With more than 20,000 financial advisors working under different business models, LPL Financial is one of the most pure-play publicly listed and traded companies that derive revenue from fees and commission generated by advisors. Years ago, LPL briefly considered the idea of starting a bank but quickly dropped that, and it has no investment banking business. That's a stark contrast to most of its publicly listed competitors.
"While financial advisor recruiting slowed industrywide in 2022, LPLA maintained the highest net new asset growth across our coverage," Chubak wrote, noting that the firm's relatively low debt ratio gives it room for mergers and acquisitions to drive earnings growth.
And LPL Financial earnings per share could see another $1.50 bump from "newer revenue initiatives, including the Enterprise and Employee channels, Liquidity & Succession, and Business Solutions," he noted, all of which have been discussed by LPL Financial CEO Dan Arnold on earnings calls over the past few years.
Meanwhile, Chubak added Bank of New York Mellon Corp. (BK) as his other "top pick" in the financial services universe, but for quite different reasons than LPL Financial, including its potential upside in net interest income levels and slower expense growth.
Bank of New York Mellon owns Pershing, a leading clearing and custody service platform for broker-dealers and registered investment advisors.
Elsewhere, Wells Fargo Advisors adds a $400 million Morgan Stanley veteran in Naples as an ex-Cetera advisor goes independent with LPL
According to a federal charges Bradley Heppner, 60, received more than $150 million in payments through funneling money from GWG Holdings to a shell company.
A $1B fund allegedly skimmed 30% off the top, then swapped cash for locked-up stock.
Insiders allegedly rewrote projections three times in four days.
TCI Wealth Advisors also has also tapped JIFFYAI to unify onboarding and servicing, while TradePMR adds ICE market data to its Fusion advisor platform
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor