Prudential PLC (LSE:PRU) has been working to rebuild its reputation since splitting off its UK and US arms, and UBS thinks the life insurer’s new focus on Asia is finally paying off.
The Swiss bank expects a solid third-quarter update next month, with new business profit up 12.5% year on year and cash earnings growing at more than 10%.
UBS has lifted its target price to 1,270p from 1,230p, implying about 25% upside from the current 1,013p. The rating stays at Buy. The analysts argue that investor worries over Prudential’s valuation gap with Hong Kong rival AIA are overdone.
The shares have rallied about 60% so far this year, which has narrowed the long-standing discount to AIA, but UBS thinks that is fair given Prudential’s new capital return story.
At its half-year results, Prudential announced regular share buybacks of $500 million and $600 million for 2026 and promised dividend growth of more than 10%.
UBS believes those payouts could see as much as 20% of the company’s market value returned to investors over the next three years, or 13% over the next two.
New business profit margins are expected to rise two percentage points to 42%, with sales up 6% across most regions. The strongest growth should come from core Asian markets, partly offset by some softer numbers from smaller “growth markets”.
UBS’s analysts call Prudential their top pick among life insurers, pointing to the combination of improving profitability and hefty cash returns. In their view, the valuation debate has run its course.
Prudential reports its nine-month trading update on 6 November.