Prudential stock forecast: Caught in the storm
The share price of American insurance company Prudential Financial (PRU) or Prudential PLC has undergone a steady decline since the beginning of 2022, posting a 4.2% loss year-to-date to $103.70 on 9 March from a closing price of $108.82 on 3 January. In comparison, the S&P 500 plunged 12.5% over the same period.
With investors questioning whether Prudential shares are a buy, sell or hold, we take a look at what factors are shaping the Prudential share price forecast in the coming year.
Prudential stock analysis: Performance over the past year
Over the period of a year (as of 9 March), the Prudential (PRU) stock has surged by 11.84%, outperforming the wider market when compared to the S&P 500’s 9.14% gain. This rally in the insurance firm’s stock price was a result of ongoing business growth, lower expenses and adequate liquidity.
According to the Prudential stock technical analysis (as of 9 March), the relative strength index (RSI) was pointing to ‘neutral’ at 37.02. A fall of below 30 would suggest the asset is undervalued or oversold and may signify a trend reversal.
The stock’s moving average convergence divergence (MACD) plunged to the negative territory, giving a ‘sell’ signal based on a reading of -2.47.
Meanwhile, the PRU stock closed at $103.70 on 9 March, which was below its 200-day moving average at $107.33, indicating a bearish, strong ‘sell’ signal for the price movement.
Fourth-quarter and full-year earnings
Prudential Financial reported year-end 2021 results on 3 February 2022. Net income attributable to the company was $7.7bn, or $19.51 earnings per share (EPS) in 2021, swinging from a net loss of $374m, or $1.00 EPS a year ago.
The company reported full-year after-tax adjusted operating income of $5.7bn or $14.58 per share, up from the $3.9bn or $9.72 per share reported the year prior.
The firm’s assets under management stood at $1.74trn at the end of the fourth quarter, slightly higher than $1.72trn for the prior-year quarter.
Considering the upbeat results, Prudential Financial’s chairman and chief executive officer Charles Lowrey said the company “entered into agreements to divest lower growth and more market-sensitive businesses, and programmatically acquired businesses for sustainable long-term growth”.
Prudential Financial also advanced its cost-savings programme and remains on track to attain its previously announced target of $750m of savings by the end of 2023, Lowrey added.
Q4 profit breakdown
The firm’s global investment management business (now renamed PGIM) reported Q4 adjusted operating income of $350m, down from $404m a year ago. The decline was due to record-high asset management fees, driven by higher average-account values. It was partially offset by lower revenues, led by a decline in incentive fees, seed and co-investment income, as well as higher expenses.
PGIM’s assets under management rose by 2% in Q4 2021 to $1.5trn from the year-ago quarter, which indicated market appreciation, positive third-party net flows, private originations and strong investment performance over the past year.
Prudential Financial’s US businesses – which included retirement, group insurance, individual annuities and individual life assurance – reported adjusted operating Q4 income of $895m, marking an increase from $794m in 2020.
The increase was driven by higher net-investment spread results and higher net-fee income, which were largely driven by equity market appreciation, and partially offset by higher expenses and less favourable underwriting results.
The company’s international businesses, which included Life Planner and Gibraltar Life & Other, reported adjusted Q4 operating income of $829m, up from $7.9m a year earlier. This increase reflected lower expenses, business growth and higher net investment spread results.
Prudential stock forecast 2022–2030
Prudential stock had a consensus ‘hold’ rating based on the outlook of 11 analysts as of 9 March, according to the data compiled by MarketBeat.
Out of the 11 analysts covering the stock, one rated it as a ‘buy’, eight rated it as a ‘hold’ and the remaining two rated it a ‘sell’.
The analysts’ consensus 12-month PRU stock price target was $110.92. It had an upside potential of 4.50% based on the closing price of $106.89 on 9 March. The stock projections varied from the low price target of $93 to a high of $131.
Of the most recent ratings, Morgan Stanley have boosted the price target from $114 to $123, while Jefferies Financial Group have initiated coverage at the price target of $93 and given the stock an ‘underperform’ rating.
According to the algorithm-based PRU stock forecast from WalletInvestor, as of 9 March, the Prudential stock could reach $105.131 by the end of December 2022. The service suggested the stock could be valued at $103.817 by the end of December 2023, $102.899 by the end of 2024 and $101.641 by the end of 2025.
Although WalletInvestor did not provide targets for 2030, its longer-term Prudential stock prediction expected the price to hit $100.376 in December 2026 and $97.658 in March 2027.
Note that analysts’ price predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing, and never invest or trade money you cannot afford to lose.
FAQs
Is Prudential a good stock to buy?
Prudential stock had a consensus ‘hold’ rating based on 11 analyst views as of 9 March, according to the data compiled by MarketBeat. Note that analyst ratings can be wrong and shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing, and never invest or trade money you cannot afford to lose.
Will Prudential stock go up or down?
The analysts’ consensus 12-month PRU stock price target was $110.92, according to the data compiled by MarketBeat at the time of writing (9 March). It had an upside potential of 4.50% based on the closing price of $106.89 on 9 March. The stock projections varied from the low price target of $93 to a high of $131.
Note that analyst predictions can be wrong and shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing, and never invest or trade money you cannot afford to lose.
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