HSBC analyst Vikram Gandhi maintained a Hold rating on Progressive (PGR – Research Report) yesterday and set a price target of $227.00.
Vikram Gandhi has given his Hold rating due to a combination of factors influencing Progressive’s recent performance and future outlook. In his analysis, Gandhi observes a modest year-over-year growth in Progressive’s Net Written Premiums (NWP) and Net Earned Premiums (NEP) for April 2024, which is slightly skewed due to a change in the closing calendar. Despite this growth, the figures fell short of HSBC’s estimates. The underlying Combined Ratio (COR), although improved from the previous year, did not meet the expectations set by HSBC, missing the estimate by 1.7 percentage points. However, Progressive’s policies-in-force (PIF) showed a positive trend, marginally exceeding HSBC’s projections.
Furthermore, Gandhi’s valuation employs a Price-to-Book (P/B) methodology, factoring in Progressive’s average adjusted core Return on Equity (RoE), the Cost of Equity (CoE), and a growth rate assumption to derive the P/B multiple. The resulting target price suggests a modest upside potential, justifying the Hold rating. Gandhi also notes potential risks, including fluctuations in the underlying loss ratio and Catastrophe (CAT) impact, which could affect the stock’s performance. Progressive’s upcoming results in May 2024 are anticipated to provide further clarity and could influence future ratings.
In another report released yesterday, KBW also maintained a Hold rating on the stock with a $207.00 price target.
Based on the recent corporate insider activity of 92 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of PGR in relation to earlier this year.
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Progressive (PGR) Company Description:
The Progressive Corporation is one of the leading auto insurers in the United States. The company also offers residential property insurance, reinsurance, and other specialty property-casualty insurance and related services. Its Personal Lines business unit covers insurance for personal automobiles, recreational and other vehicles. Under the Commercial Lines division, Progressive writes primary liability and physical damage insurance for automobiles owned by small businesses. Its Property segment offers residential property insurance for homeowners, renters and other property owners.
