Progressive Shares Suitable For Long-Term Investors; Argus Reiterates Hold Rating

Argus reiterated its Hold rating on Progressive Corp PGR, stating the company's shares are fairly valued at current prices near $33.

The analysts lowered their 2016 EPS estimate to $1.85 from $1.91 and maintained the 2017 estimate of $2.13. This decision was followed by a disappointing 2Q results on July 14 when Progressive posted 2Q16 operating earnings of $0.29 per share, down 46 percent from the same quarter last year, missing the consensus estimate of $0.33.

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The analysts maintained their Hold rating on the company, describing it as a well-managed company with a clean balance sheet. "The company targets the value segment of the Property-Casualty insurance market and spends aggressively on marketing in order to gain market share. However, earnings growth has been uneven in recent quarters, and valuations are high compared to the peer group," wrote Argus.

According to the analysts, the shares are a suitable core holding for long-term investors, but they need more stable earnings growth or lower valuations to re-classify the company to Buy.

At time of writing, Progressive was down 0.45 percent on the day, trading at $32.95.

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