Analysts at Stephens Inc. lowered their estimate for 2011 earnings at Lender Processing Services (LPS) but maintained their overweight view on the company’s stock price with a target price of $42. Carter Malloy, an analyst at Little Rock, Ark.-based Stephens, now expects LPS to earn $2.37 billion this year with adjusted income of $3.69 a share, down from a prior estimate of $2.45 billion, or $3.80 a share. Along with more than a dozen large mortgage servicers, LPS recently signed a consent order with regulators to establish new foreclosure processes following a federal investigation. LPS also announced plans to hire an outside firm to study the company’s default management businesses and document execution practices. Malloy said the company still stands to strengthen its business model through additional gains in market share, potential cost savings through increased operating efficiencies  and a more aggressive stance on share buybacks. “Though we largely expect LPS’ (first quarter) results to be below published Street estimates, we think that investors are fully aware of a bad macro environment and its likely impact on the quarter,” Malloy said. He also questioned the recent decision by Alabama-based attorney Nick Wooten, who filed another lawsuit alleging LPS split attorney fees between foreclosure law firms and third-party mortgage servicing providers. Wooten said he plans to file 10 to 12 more similar cases in coming weeks. “Wooten implied that each of his estimated 200 firms in the LPS default network would have to address their relationship with LPS,” Malloy said. “We think this raises an important point: are (some) 200 law firms and many of the nation’s largest servicers all involved in a conspiracy to make foreclosures more expensive?” He said Stephens analysts believe the LPS desktop system and network of foreclosure law firms improves the efficiency of the process and lowers costs for all parties involved, including the homeowner. “It is difficult for us to imagine that 200 law firms signed up to be part of an illegal fee-splitting arrangement,” Malloy said. LPS is set to report first-quarter earnings Thursday. Write to Jason Philyaw.