UBS analyst Alex Kramm reaffirms Neutral rating and raises price target on LPL Financial Holdings (NASDAQ: LPLA) to $40 (from $38), as the company reported 2016 fourth quarter EPS above consensus.

Kramm comments, "Relative to our forecast, LPLA reported higher gross income and lower adjusted expenses. Both asset growth and net advisor additions were slightly better than we had expected, and management sounded both pleased with 2016 recruitment (despite acknowledging a few departures) and confident in the pipeline for 2017. LPLA also came in at the low end of its latest 2016 expense guidance and maintained 2017 expense guidance, which now calls for a 2.5% y/y increase. The company reached its new target leverage ratio (3.43x vs target of 3.25x-3.5x) just one quarter after implementing it, which we believe may set the stage for a return to buying back shares, particularly given that management referred to current valuation as attractive. We believe core results should drive strength in the shares tomorrow, and with the DOL rule on hold, leverage down to LPLA's target range, a stable grip on expenses, and topline upside with rising interest rates, it appears that LPLA may be back on offense."