Morgan Stanley analyst Bob Huang downgraded the rating on Progressive to a Hold today, setting a price target of $290.00.
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Bob Huang’s rating is based on a combination of factors that reflect the changing dynamics within the insurance industry and Progressive’s current market position. The analyst notes that the previous growth and margin expansion that supported a bullish outlook for Progressive are now facing challenges. Increased competition within the industry is expected to slow down Progressive’s growth, as other insurers become more aggressive in their pricing strategies.
Additionally, Bob Huang points out that Progressive’s valuation may come under pressure as it exits a period of peak growth and margin. While the company has capitalized on profitable policies, there is a belief that it might be over-earning, with expectations that its earnings per share could decline in the coming years. Despite recognizing Progressive as a leading auto insurer in the US, the current industry environment suggests that its valuation is fully priced, prompting the Hold rating.
Huang covers the Financial sector, focusing on stocks such as Progressive, Allstate, and Renaissancere Holdings. According to TipRanks, Huang has an average return of 0.8% and a 57.93% success rate on recommended stocks.
In another report released on June 18, KBW also maintained a Hold rating on the stock with a $288.00 price target.