Broker snap: Berenberg sees 'rare buying opportunity' at Prudential

25th Jun 2013 10:34

Berenberg has reiterated its 'buy' rating and 1,420p target price for financial services giant Prudential, saying that the recent pull-back on emerging-market concerns represents a 'rare buying opportunity'."With the stock having relentlessly followed the sector higher during H2 2012, then being further boosted by stellar full-year results announced in March 2013, chances to buy have been limited," Berenberg said in a research report."Recent concerns are overdone, in our view, with the business model relatively immune to markets. Demographic shifts continue to drive demand, while balance sheet and FX exposure appear manageable. Having recently underperformed AIA, we see the current entry point as attractive."With the International Monetary Fund expecting Developing Asian economies to grow at an average annual rate of 7.5% between 2013 and 2018, the broker said that demand for insurance products will continue to increase "as the emerging middle classes look to protect their new-found wealth and living standards".The stock is trading at two times 2014 estimated book value despite generating return on equities of over 20% - "we would argue that investors are getting the future growth for free at current levels," the broker said.The stock was up 1.87% at 1,037p by 11:20.