Skip Header
Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

JPMorgan reiterates 'overweight' rating on Prudential

(Sharecast News) - JPMorgan Cazenove reiterated its 'overweight' rating on Prudential on Tuesday as it said concerns about the stock reflect fear rather than fundamentals. The bank noted that Prudential is trading at a valuation last seen saw at the start of the pandemic, when one of its main markets, Hong Kong, saw a closure of a vast proportion of its business, and at a time when there was deep investor scepticism about the separation of its US life insurance business.

"This largely reflects concern about the Chinese economy, as well as a number of other factors such as the growth outlook, asset and capital risk.

"However, we think many of these concerns reflect fear rather than fundamentals."

JPM said its unchanged 1,500p price target values Prudential at around 1x 2024E embedded value, and around 1.25x 2024E comprehensive book value, based on a comprehensive return on equity of about 15%.

The bank also said it thinks the new business profit outlook is more resilient than the market expects. JPM has raised its new business profit forecasts by 4%-5%.

"We see growth in Hong Kong new business sales in 1Q24E over 1Q23 and 4Q23E in spite of high ticket sizes, given upside in MCV (Mainland Chinese Visitor) customer volumes, improved agent productivity and the draw of better guarantees/protection than on the Mainland."

In addition, lower interest rates in December are also positive for new business margins, and the bank has lifted its HK new business margin estimates by around 10ppts for FY23E.

"We also expect strong business momentum in other regions, with the resurgence of bancassurance sales in China in 2024E," it said. "We expect double-digit new business profit growth to continue in 2024E and beyond."

At 1045 GMT, the shares were up 1.6% at 809.13p, also buoyed by a report that Chinese authorities are considering a package of measures aimed at stabilising the stock markets.

Share this article

Related Sharecast Articles

Vector Capital reports robust year-end financial position
(Sharecast News) - Commercial lender Vector Capital reported continued growth in shareholders' equity while maintaining dividends and implementing prudent bad debt provision policies in its full-year results on Friday.
Quadrise posts progress with Utah partner Valkor
(Sharecast News) - Quadrise updated the market on its collaboration with Valkor Technologies in Utah on Friday, targeting the supply of low sulphur 'MSAR' and 'bioMSAR' to the marine and power sector.
Clean Power Hydrogen reports solid full-year progress
(Sharecast News) - UK-based green hydrogen technology company Clean Power Hydrogen (CPH2) reported solid progress towards the commercial rollout of its membrane-free electrolyser (MFE) technology in its final results on Friday, driven by a revamped engineering team.
Numis downgrades DS Smith to 'hold'
(Sharecast News) - Numis downgraded its stance on packaging group DS Smith on Friday to 'hold' from 'buy' as it said there was insufficient upside to retain a buy rating.

Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

Award-winning online share dealing

Search, compare and select from thousands of shares.

Expert insights into investing your money

Our team of experts explore the world of share dealing.