Broker snap: Investec reviews Prudential forecasts after significant 2012 beat

13th Mar 2013 10:14

Investec has placed its 'hold' rating and 831p target price for financial services giant Prudential under review after the company's 2012 results significantly beat consensus forecasts."We view Prudential's FY 2012 results as very good on all metrics. As a consequence, our recommendation and sum of the parts-based target price are under review," said analyst Kevin Ryan.Operating profit on an IFRS basis rose 25% to £2,533m, well ahead of the £2,328m forecast, while the dividend was hiked by 15.9% to 29.19p, above the 26.65p estimate. New business on an annual premium equivalent basis jumped 14% to £4,195m, beating the £3,681m prediction, with Investec highlighting the company's strong performance in both Asia and the US.Ryan said: "Prudential has transformed itself from 2010 when it was struggling to generate enough cash to pay a growing dividend by re-pricing and repositioning its product offerings in Asia and the USA. The company has confirmed that the cash generation targets it set for 2013 are achievable. In overall terms, the target of £910m was exceeded in 2012 at £1,200m."He hailed the company's strong cash generation in Asia which, for the first time, became a major cash contributor, generating £384m last year compared with just £40m in 2009.Ryan said that the outperformance of the stock - up 22% so far in 2013 (including Wednesday's 2.9% rise - is likely to continue.BC