Houlihan Lokey (HLI) has a "well-diversified and defensible" business model, but its shares already trade at a premium that limits upside, Deutsche Bank said in a note Thursday.

The brokerage said much of the company's revenue comes from restructuring and valuation advisory, which are typically less sensitive to economic cycles.

However, this defensive mix also tempers earnings growth during mergers and acquisitions upswings, given Houlihan Lokey's relatively limited exposure to large-cap dealmaking compared with more pro-cyclical peers.

While Deutsche Bank acknowledged the company's strengths, it said the current valuation already reflects these attributes. "This combined with arguably less cyclical leverage to a rebound in large-cap M&A transactions versus peers keeps us on the sidelines for now," according to the note.

Deutsche Bank initiated coverage on Houlihan Lokey with a hold rating and a $210 price target.

Price: 189.85, Change: -1.45, Percent Change: -0.76