The firm also trimmed its price target to $30 from $31 on shares of the Boston-based broker-dealer.
The company is exploring strategic alternatives including a sale, Reuters reported yesterday, citing sources. LPL Financial is working with Goldman Sachs on a possible sale that's drawn interest from companies and private equity firms.
JPMorgan said the takeover speculation serves as an opportunity to exit the stock, as any deal would be compounded by "significant baggage," such as legal liabilities and negative equity.
Nomura analysts contended that a deal is unlikely, as it would have "too many hurdles."
Any buyer of LPL Financial would have to take a number of complex factors into consideration, the firm added.
The firm has a "neutral" rating and $27 price target on the stock.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
The team rates LPL Financial as a Buy with a ratings score of B-. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, notable return on equity and growth in earnings per share. The team feels its strengths outweigh the fact that the company has had sub par growth in net income.