Morgan Stanley has trimmed its price target on Prudential (LON:PRU), while staying ‘overweight’ on the shares ahead of an upcoming demerger of the group’s UK business. The update also follows the Pru’s half-year results this summer which showed that the company had continued to benefit from strong results in Asia.
Prudential’s share price has been little changed in London this morning, having inched 0.06 percent lower to 1,680.00p as of 10:23 BST. The stock is marginally underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.16 percent higher at 7,313.97 points. The Pru’s shares have lost some four percent of their value over the past year, as compared with less than a one-percent rise in the Footsie.
Morgan Stanley weighs in on the Pru
Morgan Stanley lowered its price target on the Pru from 2,481p to 2,469p yesterday, while retaining its ‘overweight’ rating on the shares. WebFG News quoted the analysts as commenting how the group’s shares had ‘materially’ underperformed their hypothetical ‘sum-of-the-parts’ valuation which they attributed to the ‘execution risk’ around a potential demerger, poor sentiment towards emerging markets and negative earnings for the Pru.
The broker further noted that linked to the execution risk around the demerger was the increased uncertainty around how the market will value the two successor entities.
“While it and indeed our base case valuation are heavily dependent on EV metrics, we believe that Pru has a good long- term track record in setting assumptions and has also shown that its EV does act as a leading indicator for IFRS earnings and cash,” Morgan Stanley concluded, as quoted by WebFG News.
Other analysts on FTSE 100 group
Barclays, which is also ‘overweight’ on the Pru, boosted its price target on the stock from 2,076p to 2,163p last week. According to MarketBeat, the FTSE 100 group currently has a consensus ‘buy’ rating and an average price target of 2,168.94p.