Citi Reiterates Hold On Principal Financial Group

Citi reiterates its Hold rating and $30 target price on Principal Financial Group

but based upon management's commitment to share repurchases within its new 2011 EPS guidance range of $2.80 - $3.00, Citi has raised its 2011E-13E to $2.80, $3.25 and $.375, respectively. There is no change to Citi's 2010E of $2.63. Underpinning guidance is assumed 9%-10% growth in average AUM along with an average S&P 500 of 1,250. On the conference call CEO Larry Zimpleman acknowledged 2011 guidance factored in $250M-$500M of share buybacks. This was a new development from the 3Q10 earnings call. Citi's revised forecasts now assume $400M for 2011 and $300M in both 2012 and 2013. Exception was FSA trailing 12-month net asset flows that Citi expects will remain under pressure from weak macro-economic environment. Guidance of 3%-5% equates to $3B- $5B, whereas we project only $0.7B. Citi has a Hold on PFG and a $30 PT PFG is trading higher at $29.75