LPL Financial is the IBD Stock of the Day as shares trade quietly — and constructively — around a buy point.
LPL Financial is the No. 1 stock in IBD's investment bankers and brokers industry group, the only one of 37 stocks with a highest-possible 99 Composite Rating. It outranks industry leaders such as Robinhood Markets and Charles Schwab.
That's largely because LPL Financial has a better EPS Rating (96) than nearly all other industry group members. Its 12-month price performance is almost as good, as reflected in its 92 Relative Strength Rating.
LPL Financial works with nearly 30,000 financial advisors and wealth managers at more than 29,000 institutions. The firm is the largest independent broker-dealer in the U.S.
In its April report, the firm said advisory and brokerage assets were $1.79 trillion, a decrease of $7 billion, or 0.4%, from the previous month. Total organic net new assets in April rose 4.1% on an annualized rate to $6.1 billion.
The company has been using acquisitions to boost its growth.
In March, LPL agreed to acquire Commonwealth Financial Network, the largest independently owned wealth management firm in the U.S. The Waltham, Mass.-based firm serves about 2,900 financial advisors who manage some $285 billion. The deal, for which LPL is paying about $2.7 billion in cash, is expected to close in the second half of the year.
San Diego-based LPL competes with other firms for advisors, and CEO Rich Steinmeier has said it is trending toward retaining about 90% of Commonwealth's advisors.
LPL Stock Near Buy Point
LPL Financial stock rose above a 384.04 buy point on May 13 — two days after shares rallied on a positive first-quarter earnings report. That early move sent the stock above an alternate entry at 347.45.
The stock's tight action in the past three weeks may be frustrating shareholders, but it should be considered positive. The flattish performance is letting the stock close its gap with the 21-day exponential moving average. It is also a sign that institutional investors are holding on for a bigger move, as an Accumulation/Distribution Rating of A- suggests.
The stock has a 21-day average true range (ATR) of 2.55%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
LPL Financial Beat Views
The firm beat analysts' expectations the evening of May 8, when it reported a 22% increase in Q1 adjusted earnings to $5.15 a share. Sales climbed 30% to $2.832 billion. Analysts expect current-quarter EPS to rise 15% to $4.45 a share, with revenue up 29% to $3.781 billion, according to FactSet.
At a William Blair conference earlier Wednesday, Chief Financial Officer Matt Audette said assets under management have doubled in the past five years, thanks largely to industry-leading organic growth. "Really the opportunity to grow from here is pretty substantial," Audette said, according to a preliminary transcript from FactSet.
Morgan Stanley analyst Michael Cyprys raised his price target on LPL Financial to 450 from 330 in a May 20 note to clients. He also raised his second-quarter EPS estimate to $4.38 a share and raised profit estimates for the full year, as well as for 2026 and 2027.
Cyprys believes LPL Financial will benefit from consolidation of a fragmented financial advisor marketplace. Strong advisor recruiting and strategic acquisitions are some factors behind that thesis.
