Morgan Stanley Sees Solid 3Q Underwriting for The Progressive Corporation

In a report published Monday, Morgan Stanley analyst Kai Pan reiterated an Underweight rating and $23.00 price target on

. In the report, Morgan Stanley noted, “PGR is a pure play in personal auto with a large footprint in the fast growing direct segment. At 14x 2015e EPS and 2.1x Book, PGR's premium valuation implies superior EPS growth & returns. However, PGR EPS growth has been lackluster the last 3/5/10 years while ROE has declined from 20%+ to 15%. Increasing price competition in personal auto marketplace and limited EPS growth trajectory in 2014-16e underpin our Underweight recommendation. We are converting our $22 base case to a price target of $23 (1.8x 3Q15e BV, 13x 2015e EPS) offering a risk-return skewed to the downside.” The Progressive Corporation closed on Friday at $25.00.