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Prudential Financial, Inc. (PRU), headquartered in Newark, New Jersey, provides insurance, investment management, and other financial products and services. Valued at $42.2 billion by market cap, the company offers a variety of products and services, including life insurance, mutual funds, annuities, pension, and retirement-related services, as well as administration and asset management.
Shares of this leading diversified insurance and asset management company have outperformed the broader market considerably over the past year. PRU has gained 28.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 27%. However, in 2024, PRU’s stock rose 13.2%, compared to SPX’s 18.1% rise on a YTD basis.
Narrowing the focus, PRU has lagged behind the iShares U.S. Insurance ETF (IAK). The exchange-traded fund has gained about 39.4% over the past year. Moreover, the ETF’s 24.7% gains on a YTD basis outshine the stock’s returns over the same time frame.
Growth in premiums, net investment income, policy charges, and other revenue streams drove Prudential Financial's overall performance. Higher asset management fees, positive net flows from third-party clients, improved net investment spread, and favorable underwriting outcomes further enhanced the company's results. However, these gains were partially offset by rising expenses associated with insurance and annuity benefits, interest credited to policyholders' account balances, interest expenses, and the amortization of acquisition costs.
On Aug. 1, PRU shares closed down more than 2% after reporting its Q2 results. Its revenue stood at $13.8 billion, up 10% year over year. The company’s adjusted EPS increased 137.7% year over year to $3.28. Its assets under management stood at $1.5 trillion, up 4.7% from the year-ago quarter.
For the current fiscal year, ending in December, analysts expect PRU’s EPS to grow 14.7% to $13.33 on a diluted basis. However, the company’s earnings surprise history is disappointing. It missed the consensus estimate in three of the last four quarters while beating the forecast on another occasion. The company failed to surpass its consensus EPS estimate by 1.2% in the previous quarter.
Among the 16 analysts covering PRU stock, the consensus is a “Hold.” That’s based on two “Strong Buy” ratings, 11 “Holds,” and three “Strong Sells.”
This configuration is more bullish than a month ago, with just one analyst suggesting a “Strong Buy.”
On Aug. 19, Morgan Stanley (MS) analyst Bob Huang maintained a “Hold” rating on PRU with a price target of $122, implying a potential upside of 3.9% from current levels.
The mean price target of $120.33 represents a 2.5% premium to PRU’s current price levels. The Street-high price target of $132 suggests an upside potential of 12.4%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
