UPDATE: Nomura Initiates Coverage on The Progressive Corporation with Reduce Rating, $20 PT on Multiple Risk Factors

In a report published Wednesday, Nomura analyst Cliff Gallant initiated coverage on

with a Reduce rating and $20.00 price target. In the report, Nomura noted, “The industry's great innovator through the use of credit scores, direct distribution, telematics ('Snapshot') combined with excellent management, aggressive capital returns and a good balance sheet position shares to trade at the industry's highest price-to-book (2.2x forward book vs. industry at 1.1x). We flag several sizeable risk factors such as competitive pressures at State Farm and GEICO, questions around telematics, and the challenge to generate market share gains in a slow-growth industry. We recommend profit taking in the shares today. Our PT of $20 is still 1.8x forward book (or 13–14x forward earnings) and a large premium to the sector, but well below the shares' current level.” The Progressive Corporation closed on Tuesday at $25.02.