2023-06-23 10:26:58 ET
Jefferies upgraded Principal Financial Group ( NASDAQ: PFG ) to Hold from Underperform and downgraded Reinsurance Group of America ( NYSE: RGA ) to Hold from Buy as analyst Suneet Kamath stayed "mindful of crowded ideas."
PFG's bullish coverage comes as its exposure to the troubled commercial real estate market "is more conservative than average," the Thursday note said. Other reasons behind the upgrade include: "the ~20% P/E de-rating since its late 2022 peak, and 3) fairly negative sell-side sentiment (38% of ratings are Sell-equivalent)."
Earlier this month, SA contributor Fade The Market, giving PFG a Hold rate, said the company's global expansion and diversified product offerings make it a "compelling long-term investment opportunity," though the stock traded near fair value.
As for RGA, the downgrade reflects Kamath's estimated implied 2024 EPS guidance of $15.90-$18.50, compared with the $18.03 consensus, as well as "our expectation that ongoing elevated mortality will limit a full re-rating back to its pre-COVID valuation; and 3) fairly positive sell-side sentiment (79% of ratings are Buy-equivalent)."
In Friday morning trading, PFG was virtually flat, while RGA drifted down 1.8% .
In SA's Peer tab, compared various stats of PFG with RGA.
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Principal Financial upgraded, Reinsurance Group of America downgraded at Jefferies