Insurer Prudential PLC (LON:PRU) got a boost as Jefferies International hiked its target price for the FTSE 100-listed firm after a recent good run by the stock following an update in March.
In a note to clients, the US broker raised its target for Pru to 1,771p, from 1,640.5p, while keeping a ‘hold’ rating on the stock.
In mid morning trading, Pru’s shares were 2.9%, or 47.0p higher at 1,687.5p.
READ: Pru raises dividend as it expects to meet 2017 targets
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In a note to clients, Jefferies’ analysts said the recent re-rating “has reflected improving macro conditions alongside continued operational momentum driven by the group’s franchise power backed by a management team of delivery.”
They added: “Prudential’s leading franchises have delivered a sustained track record of growth over the last 10 years (CAGR 17% VNB, 10% dividend) driven by high quality propositions across the regions, with products designed to accelerate cash release. “
The analysts said: “ Asian growth 2H 2016 was especially encouraging with positive trends re-established in Indonesia and Singapore, Hong Kong untarnished by Chinese Union Pay restrictions, with roll-out continuing in China.”
However, they also underlined two risk factors for the group, which lead to maintain a neutral stance - regulatory rumblings from China for the past year; and the high exposure of new business value to the US dollar, which was at 81% in full-year 2016.
The concluded: “We believe investors will not yet be prepared to factor in sustained double digit growth in dividends over the longer term, required on our calculations to justify further rerating from here.”