In a recent analysis, Deutsche Bank declared that shares of Prudential PLC (LSE:PRU), the multinational life insurance and financial services company, are "deeply oversold", even as the bank lowered its price target for the stock.
The new target price stands at 1,460p, down from the previous 1,540p, but still represents a substantial 62% premium over Prudential's current price.
Prudential's shares have taken a hit recently, dropping 20% over the last three months.
This decline has been worse than the performance of the Stoxx Europe 600 Insurance Index (SXIP), an index that tracks the European insurance sector, by approximately 25%.
And scored against rival Aviva PLC (LSE:AV.), which has advanced 10% in the last three months spurred by takeover talk, the Pru's performance looks positively anaemic.
Initially, Prudential's stock had shown promise as economies began to reopen, but those early gains have evaporated.
According to Deutsche Bank, the main culprit is elevated economic risks emanating from China, which have dampened investor sentiment.
Despite the short-term challenges, Deutsche Bank remains optimistic about Prudential's long-term prospects.
The bank believes that the company's business growth remains attractive over the medium term.
Furthermore, Deutsche sees additional potential for the company if the chief executive decides to use available resources for inorganic growth, which means expanding the business through mergers or acquisitions rather than internal development.
The 5% reduction in Deutsche's target price for Prudential is primarily due to a "worsening in our valuation for the regional discount", which likely refers to the economic risks in China affecting Prudential's valuation.
Seemingly reacting to the bullish sentiment, the stock edged 3.2% higher to 900.60p.