On Thursday, Piper Sandler adjusted its price target on Prudential Financial (NYSE:PRU) shares, listed on the New York Stock Exchange (NYSE:PRU), to $124 from the previous target of $127, while maintaining a Neutral rating on the stock.
According to InvestingPro data, Prudential (LON:PRU), with its $41.2 billion market cap, currently trades at a P/E ratio of 10.6x, while analyst targets range from $108 to $149 per share. The revision followed Prudential's announcement on Tuesday that its asset management business, PGIM, reported assets under management (AUM) of $1.38 trillion for the fourth quarter of 2024.
This figure fell short of Piper Sandler's estimate of $1.44 trillion and marked a 1.4% quarter-over-quarter decline, which the firm viewed as an incremental negative. Despite these challenges, InvestingPro analysis shows Prudential maintains a "GOOD" overall financial health score, with particularly strong marks in relative value and cash flow metrics.
However, there was a positive note as Prudential's variable investment income (VII) showed improvement. After being $0.11 below the plan in the third quarter of 2024, VII rose to approximately $0.04 above the plan in the fourth quarter, with a range of $10 to $30 million above the plan.
This performance was notably better compared to the preannouncement from VOYA last week, which reported VII modestly below the plan. The fourth quarter marked the first time Prudential pre-announced its VII figures.
Moreover, Prudential revised its financial results due to an "immaterial error" in the application of adjusted operating income within the Retirement Strategies. The company also did not announce a PrismicRe transaction in the fourth quarter of 2024 as it had previously indicated. These updates come amidst an upcoming management change at Prudential.
Piper Sandler's commentary highlighted that while the improvement in VII is a positive development, there remains a level of uncertainty and "noise" at Prudential Financial. The firm's assessment reflects the mixed financial results and the ongoing transitions within the company.
For investors seeking deeper insights, InvestingPro reveals that Prudential has maintained dividend payments for 23 consecutive years, currently offering a 4.3% yield, and has shown strong profitability over the last twelve months. Additional ProTips and comprehensive analysis are available through InvestingPro's detailed research reports.
In other recent news, Prudential Financial has undergone significant changes, including an adjustment of earnings per share (EPS) estimates and executive leadership transitions. Following an "immaterial error" in its operating earnings, Keefe, Bruyette & Woods revised their EPS estimates for Prudential for the years 2025 and 2026.
Similarly, Evercore ISI reduced its price target for Prudential shares, maintaining an "In Line" rating. Jefferies, despite reducing its price target for Prudential, maintained a Buy rating for the stock.
In addition, Prudential Financial has approved a $1 billion stock buyback plan as part of its capital management policy. The company also announced significant leadership transitions, with Andrew Sullivan set to become CEO in 2025, succeeding Charles F. Lowrey. Caroline Feeney and Jacques Chappuis will assume new roles as Global Head of Insurance and Retirement, and president and CEO of Prudential's global investment management business, PGIM, respectively.
These recent developments reflect Prudential's strategic growth and commitment to capital efficiency. However, the company anticipates a $50 million shortfall in variable investment income for Q4 and a baseline for Q4 earnings at $3.34 per share. Despite these adjustments, Prudential remains optimistic about its growth trajectory and its ability to navigate capital regimes and sustain profitable growth.
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