Prudential shares fall on concerns over outlook

* Prudential shrs fall as 2009 outlook misses Street view

* Stock down more than 4 percent

NEW YORK, Nov 5 - Shares of Prudential Financial Inc, the second-largest publicly traded U.S. life insurer, fell more than 4 percent on Thursday, as its higher outlook for full-year earnings still missed analysts' expectations.

John Nadel, an analyst with Sterne Agee, said Prudential's raised full-year forecast of $5.40 to $5.60 in operating earnings per share implied fourth quarter income of between 87 cents and $1.07 -- shy of his expectation of $1.20, and the consensus expectation of $1.21.

Still, in a note to clients, Nadel cautioned investors not to take the 2009 outlook as an indication of how Prudential could do in 2010, pointing to the otherwise strong quarterly results.

Newark, New Jersey-based Prudential reported net income of $1.09 billion for the third quarter, compared with a net loss of $118 million in the year-earlier quarter, helped by record annuities sales and narrowed investment losses.

While U.S. life insurers were badly hurt by higher costs on stock market-linked annuities and massive investment losses in late 2008 and into this year, Prudential and its larger rival MetLife Inc, which reported results last week, have emerged in a position to take business from weakened rivals.

In the quarter, Prudential's individual annuity sales rose to a record high of $5.9 billion, up from $2.5 billion a year before

"Prudential seems to be emerging as a beneficiary of the public's increased attention to balance-sheet strength and to financial security in general," said Barclays analyst Eric Berg, in a note.

However, Berg has a "neutral" rating on the shares, and said given the stock's strong performance this year, there may be better buying opportunities in other life insurance stocks, including MetLife, Genworth Financial Inc and Lincoln National Corp.

Prudential shares fell 4.1 percent to $44.65 in midday trading on the New York Stock Exchange on Thursday. The stock has about quadrupled from its 52 week low of $10.65 in March, when investors' concerns about life insurers running short of capital reached a fever pitch.