Hargreaves Lansdown argues that while Prudential’s (LON:PRU) plans to demerge its UK business and the sale of UK annuity assets make sense, it is a shame the proceeds would not be handed back to shareholders, Citywire reports. The comments came after the Pru unveiled its shake-up plans and updated investors on its full-year performance yesterday.
Prudential’s share price, which rallied in the previous session, has extended its gains this morning, having added 1.49 percent to 1,946.50p as of 09:34 GMT. The group’s shares are again outperforming the broader UK market, with the blue-chip FTSE 100 index currently standing 0.27 percent higher at 7,152.13 points. The group’s shares have added more than 12 percent to their value over the past year, as compared with a near three-percent dip in the Footsie.
HL weighs in on shake up
Citywire quoted Hargreaves Lansdown’s analyst Nicholas Hyett as commenting yesterday that the Pru’s sale of UK annuity assets suggested that M&G Prudential was looking to emulate Standard Life Aberdeen (LON:SLA). The analyst, however, argues, that despite the sale, it was ‘a shame’ that the “proceeds aren’t coming back to shareholders, especially given that it’s freeing up significant regulatory capital”.
“The two businesses that emerge will be distinctive – a high growth emerging market play and a capital light dividend machine, eventually,” Hyett continued, adding that while both businesses had their attractions, they were “probably for different kinds of investor, underlining the rationale for the split”.
Other analysts on the Pru
JPMorgan Chase, which is ‘neutral’ on the Pru, set a price target of 1,800p on the shares yesterday, while Cfra, which sees the FTSE 100 group as a ‘buy,’ set a valuation of 2,100p. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 2,065.11p.