On Thursday, Evercore ISI adjusted its price target for Prudential (LON:PRU) Financial (NYSE:PRU) shares, reducing it from $140.00 to $137.00 while maintaining an "In Line" rating.
The revision followed Prudential Financial’s announcement of several key financial metrics and an accounting restatement after the market closed.
Prudential Financial reported that its alternative investments’ performance was $10-30 million above the plan, and its PGIM segment’s other revenues net of expenses were approximately $25 million above the usual quarterly rate, reaching $65 million.
However, the company also disclosed an accounting restatement related to the deferral and recognition of options costs in the Individual Retirement segment. This restatement revealed that operating earnings had been overstated by $24 million for the third quarter year-to-date (YTD) 2023 and by $115 million for the same period in 2024.
The analysts said "while the $115mm YTD drag implies $38mm a quarter when spread evenly, the drag to go-forward earnings should be somewhat higher (~$68mm pretax) driven by building of deferred options costs that had not been amortized."
As a result, Evercore ISI has lowered its earnings estimates for Prudential Financial for 2025 and 2026 by about 3% to account for the anticipated lower earnings run-rate in the Individual Retirement business.
The firm’s headline EPS forecast for the fourth quarter has also been revised to $3.24, down from $3.43, to include the one-time impact of the Wilton Re transaction that was completed during the quarter and the better-than-expected variable investment income (VII).
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