Auto Insurer Progressive Corp's September Results Could Suggest Inflection Point, Says Analyst

Raymond James analyst C. Gregory Peters reiterated an Outperform rating on the shares of Progressive Corporation PGR and raised the price target from $145 to $165.

The company reported better-than-expected September 2023 results, leading to its shares touching a new all-time high last week.

The analyst said PGR had a more positive near-term outlook relative to peers and the potential for additional market share gains through 2025 due to dislocations in the personal auto market.

While the analyst remains cautious of volatility in loss ratios for the peer group, moving forward, PGR is expected to continue to report auto combined ratio of 96% or below primarily reflecting historically low expense ratios in the near term and improving underlying loss ratios through 2025.

The analyst has raised 2023, 2024, and 2025 operating EPS estimates to $5.30, $6.80, and $8.30.

The estimates reflect the analyst’s outlook for PGR to achieve its 96% target auto combined ratio in 2023/2024/2025 due in part to lower near-term expense ratios and improving underlying loss ratios through 2025.

The analyst believes Progressive is one of the best-positioned companies to outperform in 2023, considering its competitive position that includes a more flexible pricing platform and technology solutions that monitor and price for distracted driving.

Price Action: PGR shares are trading higher by 1.53% at $157.32 on the last check Monday.