Analyst Bob Huang of Morgan Stanley maintained a Sell rating on Progressive, retaining the price target of $214.00.
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Bob Huang’s rating is based on several key considerations. Firstly, there is a noticeable slowdown in Progressive’s personal auto policies in force (PIF) growth, which is expected to remain subdued despite typically stronger seasonal trends. This indicates potential challenges in maintaining growth momentum. Additionally, while the company has hinted at significant stock buybacks, similar to those last seen in 2011, the impact on share price may be limited to a short-term boost rather than sustained growth.
Moreover, the competitive landscape remains fierce, and early data suggests that the October personal auto PIF additions may not meet expectations, further pressuring the company’s performance. Although the valuation of Progressive has become more appealing since the previous downgrade, the ability to navigate inflationary pressures and competitive pricing will be crucial. Management’s indication that tariff impacts might be less severe offers some optimism, but overall, these factors contribute to the Sell rating.