On Jun 3, we issued an updated research report on Prudential Financial Inc. PRU.
Prudential boasts diversified operations spanning the United States, Asia, Europe and Latin America. Its broad product portfolio includes life insurance, annuities, mutual funds, pension- and retirement-related investments, administration and asset management, and securities brokerage services. The right mix of business with strong fundamentals and superb risk management capabilities have strengthened its market position and prompted business diversification. This, in turn, has made it more competitive than its peers.
Prudential is set to benefit from the aging American population. The company will witness huge demand for retirement benefits’ products as baby boomers retire.
Moreover, Prudential has established itself as a leader in the pension closeout market after it entered into the GM, Verizon, and Bristol-Myer deals last year. All these collaborations offer long-term growth opportunity.
In the asset management business, the company’s strong fixed income and real estate investment platforms should drive performance.
The company has also undertaken capital related transactions which will consolidate the capital structure of the company and will produce an increase in its readily deployable capital.However, the company’s group disability and pension/401(k) segments remain a cause of concern. Onerous SIFI capital standards also pose as risks as these could limit the company’s ability to deploy capital.
Prudential carries a Zacks Rank #3 (Hold). Some better-ranked players in the same space are Assured Guaranty Ltd. AGO, Old Republic International Corporation ORI and Radian Group Inc. RDN. While both Assured Guaranty and Old Republic sport a Zacks Rank #1 (Strong Buy), Radian Group carries a Zacks Rank #2 (Buy).
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