Market Overview

MKM Disects Progressive's July Results

Share:
MKM Disects Progressive's July Results

Auto insurance company Progressive Corp (NYSE: PGR) reported a financial update for the month of July where the company showed a modest but expected slowdown in personal auto policies, according to MKM.

The Analyst

MKM Partners analyst Harry Fong maintains a Buy rating on Progressive with a $100 price target.

The Thesis

Personal auto policies-in-force rose 11.8% during July which represents a slowdown from recent months which ranged between 12.5% and 13.5% and 14% throughout 2018, Fong wrote in a note. The slowdown is attributed to growing competition but there is reason to believe Progressive can expand at a faster pace versus the competition amid expansion into bundled markets and commercial insurance.

Auto insurance companies are showing better performance in recent months due to a favorable auto loss frequency, the analyst wrote. In Progressive's case, frequency has been ranging at around 4% recently while severity has been elevated at around 8%.

"Our sense is that Progressive has been staying even with loss cost trends through the first quarter of 2019, but it may have slowed the pace of rate actions in the second quarter," the analyst also wrote. "This change if real will likely begin to show up over the next few months."

Finally, Progressive's strong July performance prompted the research firm to lift its 2019 EPS estimate from $5.15 to $5.30 but estimates for 2020 remain unchanged at $5.00. The company continues to "surprise" with good underwriting results despite an uptick in competition.

Price Action

Shares of Progressive traded higher by 2% Thursday at $77.09.

Related Links

Progressive Set For Stable Underwriting, Says Bullish Raymond James

Raymond James: Progressive Could Be Set For Sustained Underwriting Growth

Posted-In: Auto Insurance Harry Fong insurance MKM PartnersAnalyst Color Reiteration Analyst Ratings

 

Related Articles (PGR)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
LOWRBC CapitalMaintains129.0
MARRBC CapitalMaintains148.0
CRLSunTrust Robinson HumphreyMaintains162.0
CFRSunTrust Robinson HumphreyMaintains105.0
ZYNEJefferiesAssumes11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Avianca Sees Another Loss During Restructuring

Pure Green CEO Discusses The Cannabis Company's Approach To Continued Growth