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Progressive Set For Stable Underwriting, Says Bullish Raymond James

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Progressive Set For Stable Underwriting, Says Bullish Raymond James

Progressive Corp (NYSE: PGR) reported strong fourth-quarter results Jan. 23, with 18-percent year-on-year top-line growth and a 200-basis-point expansion in the underlying combined ratio.

Progressive’s shares are trading at a discount to the S&P 500, despite its leading ROE profile. The insurer is poised for stable underwriting results and book value of equity per share growth through 2020, according to Raymond James.

The Analyst

Analyst C. Gregory Peters maintains a Strong Buy rating on Progressive with an unchanged $85 price target.

The Thesis

Progressive posted Q4 operating EPS of $1.22, ahead of estimates on the back of a better-than-expected combined ratio and a negative effective tax rate, Peters said in a Monday note. 

Agency net premiums written grew 14 percent year-on-year, while direct NPW rose 19 percent, the analyst said. Net investment income growth accelerated to 60 percent year-on-year. Personal line auto policies in force grew by 14 percent.

Progressive announced a higher-than-expected annual variable dividend of $2.5140 per share, representing a dividend yield of around 3.9 percent.

The company announced its plans to hire 10,000-plus people in 2019 to support its rapid growth.

Peters said he expects Progressive to generate NPW growth of 11 percent in 2019 and 7 percent in 2020, “reflecting stable to improving accident frequency trends and increased competition as the industry appears to be rate adequate.”

Raymond James' operating EPS estimate for 2020 has been raised from $4.80 to $4.90.

Price Action

Progressive shares were up 0.55 percent at $65.55 at the time of publication Tuesday. 

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Latest Ratings for PGR

DateFirmActionFromTo
Nov 2020Morgan StanleyMaintainsEqual-Weight
Nov 2020BarclaysInitiates Coverage OnUnderweight
Oct 2020Raymond JamesMaintainsStrong Buy

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View the Latest Analyst Ratings

 

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StockFirmActionPT
HYMCBMO CapitalInitiates Coverage On
DEMorgan StanleyMaintains335.0
SBNYRaymond JamesMaintains138.0
CORTHC Wainwright & Co.Maintains32.0
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