Progressive: Sustained Policy Momentum, Elevated Profitability, and Valuation Upside Support Buy Rating

Analyst Joshua Shanker of Bank of America Securities reiterated a Buy rating on Progressive, boosting the price target to $334.00.

Joshua Shanker has given his Buy rating due to a combination of factors that highlight Progressive’s strong operating momentum and attractive valuation. He points to December 2025 personal auto policy growth of 211,000 policies, which materially exceeded both his own flat expectation and market forecasts, and came in during a period that is typically seasonally soft for new policies. He also notes that December operating EPS of $1.72 beat consensus, helped by favorable prior-year loss development, lower catastrophe losses, and an unexpected tax benefit, even though higher advertising expenses and Florida-related rebates weighed on results. While he acknowledges that elevated marketing spend and ongoing customer refunds in Florida will pressure the expense ratio and have led him to trim his 2026 EPS outlook, he interprets the heavier advertising as supportive of sustaining better-than-expected policy growth.

At the same time, Shanker emphasizes that Progressive remains highly profitable relative to its long-term “normalized” underwriting targets, and he expects margins to moderate only gradually from elevated levels. Using the S&P 500’s 2027 P/E multiple applied to his 2028 normalized earnings estimate, he derives a revised 12‑month price objective of $334, modestly higher than his prior target and implying substantial upside from the current share price. He also expresses confidence in the company’s leadership transition, noting Progressive’s track record of cultivating strong internal talent and viewing the incoming CFO as a capable successor who should maintain strategic continuity. Taken together—robust policy growth, earnings outperformance, resilient profitability, and a sizeable valuation discount to his fair value estimate—these factors underpin his decision to maintain a Buy rating on Progressive’s shares.

In another report released today, Roth MKM also maintained a Buy rating on the stock with a $260.00 price target.