Broker tips: Schroders, Prudential
RBC Capital Markets reiterated its 'outperform' rating on Schroders on Thursday and hiked its price target to 475p from 395p as it lifted its adjusted operating earnings estimates by 1%/6%/9% over FY25/26/27, updating the FY24 results and strategy evolution.
"Upgrades are driven by the delivery of efficiencies, which offsets Public Market revenue cuts, where SDR's guidance for only 'stable' Public Markets revenue to FY27 should reset market expectations," the bank said.
"We consider this guidance conservative, and see risk skewed to the upside from the fee margin or net flow environments being more supportive than prudently assumed."
RBC said Schroders trades on an undemanding 12-month forward price-to-earnings of 11x, which is a circa 20% discount to its historic average and sum of the parts.
Analysts at Bank of America reiterated their 'buy' recommendation for shares of Prudential on the back of the insurance and wealth management outfit's latest results.
In particular, they highlighted Prudential's targets for double-digit growth in 2025 new business profit, after tax operating profit, operating free surplus generation and dividends.
They also highlighted the "positive surprise" from the firm, which no longer expects to inject more capital into its Chinese joint-venture.
The "strong" update was expected to drive a re-rating in the shares, which they also said were one of their "top picks".
Their target price was unchanged at 1,000.0p.
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