- Barclays analyst Tracy Benguigui downgraded Principal Financial Group ( NASDAQ: PFG ) to Equal Weight from Overweight on Tuesday as the stock's recent rally leaves little room for further multiple expansion.
- "Looking forward, we remain constructive on company fundamentals, execution and its peer leading 75%-85% FCF (free cash flow) conversion," the analyst wrote in a note to clients.
- The stock, though climbed 21% after its Q3 earnings beat and now trades at an implied 12.3x price/earnings of Benguigui's estimated 2023 EPS of $7.18. That compares with peers' 7x-9x and well above Principal's ( PFG ) average multiple of 9.4x.
- She reduced 2023 earnings estimates to $7.18 from $7.30, reflecting the effects of equity market and fixed income headwinds affecting RIS-fee margins and "a less opportune time to harvest real estate gains."
- Benguigui's Equal Weight rating contrasts with the SA Quant rating of Strong Buy and comes in line with t he average Wall Street estimate of Hold.
- Principal ( PFG ) stock edged up 0.1% in Tuesday premarket trading.
- Last month, SA contributor Mike Zaccardi said Principal ( PFG ) show high relative strength, though it's no longer cheap
For further details see:
Principal Financial cut to Equal Weight at Barclays on rally limits further upside