Prudential PLC (LSE:PRU) has value as a pure-play Asia-Africa insurer following the demerger of the US arm, Jackson Financial, which becomes effective next week.
That at least is the conclusion of Credit Suisse (NYSE:CS.), which raised its share price target to 1,800p a share from 1,744p while repeating its ‘outperform’ recommendation.
“The stock has recovered as we expected it to once the demerger was finally announced, and we think this removes a key uncertainty that should reduce the cost of equity,” the investment bank said in a note to clients.
“However, we still see further valuation upside potential.”
Credit Suisse (NYSE:CS.)’s analysts pointed out that rival AIA trades at 1.9-times enterprise value, while Prudential, at 1,537p a share, is rated at just 1.2-times.
It said this was is “an unwarranted discount even after adjusting for economic assumption differences or AIA’s stronger China franchise”.