Broker snap: Pru still a buy despite rally

13th Aug 2009 12:46

Shares in life assurance giant Prudential are up nearly 40% over the last month but after the release of strong results on Thursday morning Panmure Gordon believes the shares are still worth buying.The interim results came in "well above the top end of the range of expectations" and according to the broker's analysis "the key driver appears to be new business profitability that, at £691m (+25%), was well above £537m consensus.""These are good figures, and have benefited from capital preservation and focus on profitability in tough market conditions," the broker added."The shares are trading at small discount to 30 June 2009 Embedded Value of 491p per share, which we believe to be unwarranted given the medium outlook for new business and cash generation from the Inforce business. The increase in dividend should be welcomed and our 2009E divi of 19.8p/share (+4.7%) gives an attractive 4.1% yield," the broker notes. Panmure Gordon has a target price of 585p for the stock.