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On Thursday, CFRA analyst Catherine Seifert downgraded Prudential Financial (NYSE:PRU) stock from Buy to Hold and reduced the price target from $130.00 to $110.00. According to InvestingPro data, this aligns with the broader analyst sentiment, as 8 analysts have recently revised their earnings estimates downward. The stock currently trades at $104.46, with analyst targets ranging from $80 to $134. The new price target reflects a valuation of 7.5 times the firm’s 2026 operating earnings per share (EPS) estimate of $14.75, which was decreased by $0.75, and 8 times the 2025 EPS projection of $13.76, lowered by $0.94. This valuation is based on Prudential (LON:PRU)’s historical five-year average forward multiple of 8 times and compared to a peer average of 10 times. InvestingPro analysis indicates the stock is currently trading near its Fair Value, with a P/E ratio of 16.4x and a PEG ratio of 2.11x, suggesting relatively high valuation compared to its growth prospects.
Prudential reported a first-quarter EPS of $3.29, which is an increase from the restated $3.05 figure but below CFRA’s estimate of $3.78 and the consensus estimate of $3.18. The company experienced a significant 62% decline in operating revenues, largely attributed to a 57% reduction in premiums due to the impact of run-off businesses and decreased activity in some of its ongoing lines. However, this was partly mitigated by a 53% decrease in benefit and annuity costs.
The U.S. Businesses unit of Prudential saw a 16% increase in profits, but this was contrasted by an 8% decline in profits from PGIM and a 5.4% fall in International Business profits. The mixed financial results, alongside Prudential’s ongoing realignment efforts and a challenging macroeconomic environment, led CFRA to conclude that the stock lacks a near-term catalyst for growth. Despite these challenges, Prudential maintains a strong dividend profile, with a current yield of 5.33% and a 16-year streak of dividend increases. Get deeper insights into Prudential’s financial health and access comprehensive analysis with a InvestingPro subscription, which includes access to detailed Pro Research Reports covering 1,400+ top US stocks.
Seifert’s assessment indicates that while Prudential’s core U.S. business has shown profitability, the overall performance has been uneven across its various units. The company’s efforts to restructure its operations are noted, but the current economic conditions and the company’s financial results suggest that immediate positive drivers for the stock are not evident. As such, CFRA has revised its outlook on Prudential Financial shares, adjusting the investment rating and price target accordingly.
In other recent news, Prudential Financial reported its first-quarter 2025 earnings, which fell short of analyst expectations in both earnings per share (EPS) and revenue. The company posted an EPS of $3.29, missing the forecasted $3.37, while revenue reached $13.41 billion, below the anticipated $14.25 billion. Despite these misses, Prudential Financial noted an 8% increase in pretax adjusted operating income compared to the same quarter last year, driven by favorable underwriting results in its U.S. businesses and significant growth in Japanese retirement products. The company continues to focus on derisking and operational efficiency, although it faced challenges with alternative investment income, which was $90 million below expectations. Analysts from firms such as KBW and Evercore ISI raised questions about the company’s capital deployment plans and derisking strategies. Prudential Financial’s CEO, Andy Sullivan, emphasized the company’s ongoing efforts to adapt to changing market conditions and optimize its balance sheet. The company maintains a target for 5-8% growth in core adjusted operating EPS through 2027, despite anticipating a 3-4% EPS drag in 2025 due to factors in Japan and variable annuity runoff. Looking forward, Prudential Financial aims to capitalize on high-growth areas while managing risks in a volatile market environment.
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