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Compass Point initiates coverage of Raymond James, LPL Financial

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Compass Point initiates coverage of Raymond James, LPL Financial

Compass Point analyst Chris Allen initiated coverage of Raymond James Financial Inc. at a "buy" rating and a price target of $96.

The analyst believes the company is well-positioned to deliver healthy returns and double-digit earnings growth going forward. In addition, he said Raymond James will be able continue to recruit and retain its financial advisers thanks to its "unique" work culture, optionality around advisor channels, and products and services capabilities.

The analyst's adjusted EPS estimates for the company are $6.98 for 2019 and $7.67 for 2020.

Separately, Allen initiated coverage of LPL Financial Holdings Inc.'s stock at a "buy" rating and a price target of $82.

LPL is well-positioned as a "scale player" in the U.S. retail investment market considering its scale and ongoing investments in the platform, the analyst said.

The company currently has 45% of its total client assets in advisory, well below industry averages of about 65%, which represents a meaningful opportunity for the company, he said. Allen expects advisory growth of nearly 9% at LPL through 2020, with advisory assets growing to 47% of total client assets.

The analyst's adjusted EPS estimates for LPL Financial are $6.62 for 2019 and $7.45 for 2020.