The blue-blooded broker said it now less concerned about Prudential's US and UK businesses, as the US macro backdrop remains strong and the insurer's pull-back from the capital intensive annuities business in the UK.
“In our view the US businesses (variable annuities and fixed annuities) are geared to US macro factors such as equity markets, credit markets and interest rates which continue to move in a favourable direction,” Cazenove said.
The regulatory backdrop in the US under President Trump also looks very positive, Caz opined.
In the UK, a large part of the Pru's annuities business is now in run-off mode.
“In this situation, capital management is key and management has taken actions to reduce longevity risk and changed the asset allocation to help back book margins,” the broker said.
On the growth front, Asia looks the best bet, which would help offset declining UK life assurance earnings and some drag from the fund management arm, M&G.
In the US, higher markets would continue to support the variable annuities earnings, the broker argues.
Caz has raised its target price from 1,450p to 1,705p for Prudential, which currently trades at 1,778p.
It remains agnostic on the shares, preferring Aviva and St James's Place in the sector.