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On Wednesday, CFRA analyst Alex Goh upgraded Prudential (LON:PRU:LN) (NYSE: PUK) stock rating from Hold to Buy and increased the price target from GBP8.00 to GBP10.00. The upgrade reflects a positive outlook on the company’s financial performance and growth potential. The stock has shown remarkable momentum, with a 38% gain year-to-date, and analysts maintain a Strong Buy consensus with targets ranging from $30.83 to $39.88. According to InvestingPro, Prudential boasts a perfect Piotroski Score of 9, indicating exceptional financial strength.
Goh cited Prudential’s defensive revenue profile and the potential for double-digit growth in new business profit (NBP) as key reasons for the upgrade. According to the latest business update from Prudential, the company’s first quarter NBP for 2025 rose by 12% year-over-year to $608 million. This performance aligns with the company’s guidance for 2025 and supports a compound annual growth rate (CAGR) of 15% to 20% for NBP from 2022 to 2027, aiming for an objective financial services growth (OFSG) of over $4.4 billion by 2027, up from $2.6 billion in 2024. The company’s strong financial position is evidenced by its healthy current ratio of 2.08 and revenue growth of 11% in the last twelve months.
The analyst’s decision is also influenced by the valuation metric used, setting the target price based on 1.8 times the projected 2025 price-to-book value (P/BV). This valuation stands one standard deviation below Prudential’s 10-year average of 2.4 times, and below the average of its peers, which is around 2 times. Goh finds the current 29% discount compared to peers unwarranted given Prudential’s strong financial indicators. The company trades at an attractive P/E ratio of 12.66 and offers a steady 3% dividend yield, having maintained dividend payments for 34 consecutive years. For more detailed valuation metrics and financial analysis, visit InvestingPro, where you’ll find over 30 additional financial indicators and exclusive insights.
Goh has maintained earnings per share (EPS) forecasts for Prudential at $1.05 for 2025 and $1.24 for 2026. The analyst’s optimism is rooted in the company’s consistent growth outlook provided by management, which supports the raised stock rating and price target. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value, with strong fundamentals supporting its current price levels.
In other recent news, Prudential Plc is considering a public listing of its Indian asset management business, IPAMC, in which it holds a 49% stake. This move follows an announcement made by the company, and UBS analysts have reaffirmed their Buy rating for Prudential with a price target of GBP12.70. The potential listing could unlock significant value, as Indian asset managers typically trade at high multiples, around 30 times earnings, compared to Prudential’s current trading multiple of 9 times. UBS suggests that the proceeds from the listing might be used for a share buyback, potentially increasing Prudential’s earnings per share by approximately 10%. ICICI Bank, the majority stakeholder in IPAMC, intends to maintain its majority shareholding after the listing, indicating confidence in the business’s future. This development is part of Prudential’s strategy to optimize its portfolio and enhance shareholder value. The company’s shares are listed on both the London Stock Exchange (LON:LSEG) and the New York Stock Exchange.
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