Third Point announced on Monday evening that it has built up a near-5% economic stake in Prudential, simultaneously publishing a letter to the board asking, inter alia, for it to separate its US and Asian operations.
In a note to clients, the German bank’s analysts said: “In our opinion, a break-up of Prudential is logical.”
“Though not a new concept, this is the first time that pressure is coming from an aggressive activist investor,” they added.
The analysts said they have lifted their for the Pru recommendation to buy, based on their view that “there is upside in the event of a demerger (to between 1,600p-1,800p), or – even if there isn’t – that recent share price weakness offers a buying opportunity.”
The Deutsche analysts hiked their target price for the Pru to 1,600p from 1,500p, with the shares currently trading at 1,413.50p, down 0.5% after strong gains on Tuesday.