UPDATE: Citigroup Raises PT on Principal Financial Group Following 2Q13 Results Report

In a report published Monday, Citigroup analyst Erik J. Bass reiterated a Neutral rating on Principal Financial Group PFG, and raised the price target from $37.00 to $45.00.

In the report, Citigroup noted, “In our view, PFG's 2Q13 results should help alleviate concerns about margin compression in the U.S. retirement business. We are encouraged by the increase in FSA recurring deposits (up 17% from 2Q12, helped by higher deferral rates and corporate matches) as this is high-margin growth (minimal acquisition costs). It also appears the focus on higher revenue accounts and products is starting to pay off as fee & other income grew at a faster rate than AUM for FSA and PGI. While we do not expect margins to sustain at 2Q levels near-term, the results suggest the business has more operating leverage than we initially anticipated.”

Principal Financial Group closed on Friday at $42.99.