J.P. Morgan Reports Weaker Than Expected Business Trends For Principal Financial Group

According to J.P. Morgan, Principal Financial Group (NYSE: PFG) business trends were weaker than expected.

J.P. Morgan said that its outlook for PFG remains cautious following 1Q11 results. “Strong equity market results and capital deployment are potential positive catalysts, but we believe the current valuation premium is excessive as our near-term ROE and EPS growth projections are in-line with the life group. We maintain our Underweight rating. Our near term outlook for 401(k) flows is cautious. Also, we believe that PFG's valuation already reflects expected ROE expansion as it trades at a premium to the group despite in-line returns and EPS growth. We feel valuation comparisons to asset managers are unjustified as PFG's flows do not have the same leverage to a rising equity market.”

Principal Financial Group closed yesterday at $33.56.