Principal Financial Group Gets An Upgrade: A Look Into Its Investment Portfolio's Strength

Keefe, Bruyette & Woods, Inc analyst Ryan Krueger upgraded Principal Financial Group Inc PFG to Market Perform from Underperform at a reduced price target of $75 from $77. 

The analyst believes PFG's investment portfolio is overweight, given the commercial real estate business, with loans + CMBS at 23% of invested assets (vs 14% for the life insurance sector).

However, the analyst thinks PFG's invested asset leverage is below average owing to its favorable business mix (6x vs 9x life peers) and strong CRE credit quality.

Krueger modestly raised 2023 and 2024 EPS to $6.75 (vs. $6.65 earlier) and $7.50 (vs. $7.40 earlier) to reflect better margin trends expected in the Retirement business. 

In April, PFG reported Q1 2023 adjusted EPS of $1.48, missing the consensus of $1.53. 

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Price Action: PFG shares are trading higher by 0.54% at $71.21 on the last check Friday.