Morgan Stanley Remains Underweight After Worst April EPS for Progressive in 10+ Years

Morgan Stanley has published a research report on Progressive

after the company reported its worst April EPS in over 10 years. In the report, Morgan Stanley writes, "In late April PGR's CEO notified investors via an 8K that the combined ratio was likely to be under pressure versus historically strong results (see our April 25th PGR note, Where's the EPS Growth?). Indeed, April Op EPS results of $0.11 declined 31% YoY as underwriting margins declined to the lowest April result since 2000 due to higher losses and rising expenses. Specific drivers of the disappointing results included core margin (excluding reserve movement and cats) deterioration of 320bps YoY (95% Combined Ratio), a third consecutive monthly reserve charge ($19m), $46m in catastrophe losses and lower investment income." Morgan Stanley maintains its Underweight rating on Progressive, which is currently trading down $0.45 from yesterday's $21.85 closing price.