Last week, you might have seen that LPL Financial Holdings Inc. (NASDAQ:LPLA) released its yearly result to the market. The early response was not positive, with shares down 3.0% to US$92.13 in the past week. Results were roughly in line with estimates, with revenues of US$5.6b and statutory earnings per share of US$6.62. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the eight analysts covering LPL Financial Holdings are now predicting revenues of US$6.12b in 2020. If met, this would reflect a decent 8.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 2.3% to US$6.94. Before this earnings report, analysts had been forecasting revenues of US$6.06b and earnings per share (EPS) of US$6.97 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$108. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on LPL Financial Holdings, with the most bullish analyst valuing it at US$123 and the most bearish at US$87.00 per share. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that LPL Financial Holdings's rate of growth is expected to accelerate meaningfully, with forecast 8.9% revenue growth noticeably faster than its historical growth of 5.8%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 5.1% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect LPL Financial Holdings to grow faster than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple LPL Financial Holdings analysts - going out to 2021, and you can see them free on our platform here.
You can also see whether LPL Financial Holdings is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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