PFG: Strong Claims Experience Will Support Earnings Durability And Upside Potential

Analysts have nudged their price target on Principal Financial Group modestly higher, reflecting a roughly $2 increase in estimated fair value to about $103 as they factor in stronger life insurance earnings, resilient claims experience, and easing downside risks across the core business.

Analyst Commentary

Bullish analysts have become incrementally more constructive on Principal Financial Group in recent months, with a series of upward price target revisions and an upgrade in rating that collectively signal improving confidence in the company’s earnings trajectory and risk profile.

Across recent research updates, these analysts cite better than expected life insurance performance, resilient claims experience, and a calmer macro and catastrophe backdrop as reasons for lifting valuation assumptions, even as they acknowledge ongoing secular headwinds in certain fee based businesses.

Notably, one prior bearish stance was softened as downside risks to the core business were viewed as more contained, leading to a move up to a more neutral posture. Others highlighted steady earnings delivery and supportive market conditions as justifying higher fair value estimates.

Bullish Takeaways

• Rising price targets into the high 80s and low 90s suggest that bullish analysts see stronger earnings durability and are willing to assign a richer multiple to Principal’s core franchises.
• The reduction in perceived downside risk to the core business, including retirement and asset management, supports a re rating thesis as investors gain confidence that past concerns are now better reflected in the stock.
• Stable to improving claims experience and a relatively calm catastrophe environment underpin expectations for more predictable profitability, reinforcing higher valuation frameworks.
• Normalization in variable investment income and incremental fee and equity market tailwinds are viewed as catalysts for steady growth in earnings power, providing support for upward revisions to long term growth and return assumptions.

What's in the News

• Piper Sandler raised its price target on Principal Financial to $94 from $92 and reiterated an Overweight rating, citing supportive claims experience and ongoing fee and equity market tailwinds (Piper Sandler periodical)
• The company completed a share repurchase of 1,407,443 shares, about 0.63% of outstanding, for $225.16 million, bringing total buybacks under the February 12, 2024 program to 14,807,669 shares, or 6.46%, for $1.32 billion (company buyback update)
• Principal Financial declared a fourth quarter cash dividend of $0.79 per share, payable December 19, 2025 to shareholders of record on December 3, 2025 (company dividend announcement)

Valuation Changes

• Fair Value Estimate has risen slightly, increasing from approximately $101 to about $103 per share, reflecting modestly stronger earnings expectations.
• Discount Rate has increased moderately, moving from roughly 6.43 percent to about 6.96 percent, implying a somewhat higher required return in the valuation model.
• Revenue Growth has edged higher, from about 6.64 percent to roughly 6.77 percent, indicating a marginally more optimistic outlook for top line expansion.
• Net Profit Margin has improved, rising from around 12.23 percent to approximately 13.13 percent, signaling expectations for better underlying profitability.
• Future P/E multiple has declined slightly, easing from about 10.57x to roughly 10.08x, suggesting a modestly more conservative valuation despite improved fundamentals.