Time To Take A Breather At Principal Financial?
In a report published Tuesday, Keefe, Bruyette & Woods analyst Ryan Krueger downgraded the rating on Principal Financial Group Inc (NYSE: PFG) from Outperform to Market Perform, while raising the price target from $59 to $61.
Principal Financial's shares have surged 12 percent since June 30, as compared to a 5 percent decline in traditional asset managers, a 1 percent rise in large-cap life insurers, and a 2 percent rise in the S&P 500. Analyst Ryan Krueger said that the outperformance was driven by the company's robust 2Q15 results and takeout speculation.
Principal Financial reported its 2Q15 results ahead of the estimates by 6 percent, "with favorable flows across the franchise," Krueger wrote, while adding that the 2016 estimate remained unchanged due to FX weakness.
Earlier this year, Japan's Nippon Life has recently announced a 3-5 year overseas M&A plan of ¥1 trillion, or about $8 billion. Nippon Life already has a 6 percent stake in Principal Financial, and the two companies "have a longstanding business relationship," which has led to some speculation of Nippon Life acquiring Principal Financial, the Keefe, Bruyette & Woods report stated.
"While we can't completely rule it out, we view a $20+ billion acquisition of PFG by Nippon Life as unlikely compared to its $8 billion 3-5 year M&A target," Krueger commented.
The report added, "We're rolling forward our price target to an average of 2016E and 2017E EPS, increasing it to $61 from $59."
Latest Ratings for PFG
|Oct 2016||Credit Suisse||Initiates Coverage on||Underperform|
|Sep 2016||Wells Fargo||Assumes||Outperform|
|Sep 2016||Goldman Sachs||Maintains||Sell|
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