On Oct 10th, we upgraded our recommendation on Prudential Financial Inc. ( PRU) to Outperform from Neutral, reflecting our optimism in the company’s growth prospects.
Prudential has a well diversified business profile with reach in different markets and a broad product portfolio.
Prudential is set to benefit from the aging American population. The company is witnessing a huge demand for retirement benefits products as baby boomers enter retirement.
Moreover, the acquisition of Individual Life Insurance business of The Hartford Financial Services Group Inc. ( HIG) at the end of 2012, has helped this Zacks Rank #1 (Strong Buy) company earn a place among the top five largest individual life insurance companies in the U.S. in terms of new recurring premium sales.
The company also has significant overseas business which is generating strong earnings.
Also, Prudential’s Retirement segment is set to greatly benefit from the company’s penetration in the pension risk transfer business.
Prudential’s investment portfolio is also performing better. Investment related losses have narrowed down and commercial mortgage backed securities have yielded net unrealized gain as of Jun 30, 2013.
Prudential has been witnessing rising earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for 2013 moved up by 1.2% to $8.72 as 7 out of 17 estimates moved north. The same for 2014 rose 0.8% to $9.03 as 6 of 17 estimates were raised over the same time frame. The expected long term earnings growth is 13%.