Broker snap: US appears vulnerable at the Pru

10th Mar 2011 10:01

Nomura seems concerned that, despite consensus-beating results, only a quarter of Prudential's earnings come from Asia, and has maintained its 'reduce' recommendation on the insurer."Prudential's results beat consensus in most respects but most of the company's growth came from the US and not Asia, and even to some extent from a renaissance of Pru's UK strategy," says analyst Nick Holmes.US earnings grew by 35% and now contribute 41% of group operating profit, while Asia contributes just 25% of earnings and grew by only 19% on a currency-adjusted basis.Also, the Japanese broker thinks that the group's US performance is likely to slow considerably in 2011, both in terms of new business and earnings growth partly due to increasing competition limiting the increase in sales.Nevertheless, Nomura raises 2011 operating earnings per share estimates to 55.2p, from 51.42p, to reflect Pru's re-entry into the UK bulk purchase annuity market, and raises the target price from 700p to 735p.