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Investing.com - Morgan Stanley (NYSE:MS) downgraded Progressive Corp. (NYSE:PGR) from Overweight to Equalweight on Monday, while lowering its price target to $290.00 from $330.00. According to InvestingPro data, Progressive currently trades at a P/E ratio of 17.5 and maintains a "GREAT" financial health score, with 12 analysts recently revising earnings estimates upward.
The downgrade reflects Morgan Stanley’s view that Progressive’s previous investment thesis of "unincumbered growth and margin expansion is nearing its end." The firm identified two key factors changing the outlook: intensifying industry competition and potential pressure on Progressive’s valuation as it exits a peak growth and margin environment. Despite these concerns, the company has demonstrated strong performance with revenue growth of 20.7% over the last twelve months. Get deeper insights into Progressive’s competitive position with a comprehensive Pro Research Report, available exclusively on InvestingPro.
Morgan Stanley now prefers Allstate (NYSE:ALL) over Progressive, citing Allstate’s "easier hurdle to overcome, a more attractive valuation, and potentially not over earning" on a relative basis.
The firm emphasized that Progressive remains "the best-in-class auto insurance underwriter in the US," but believes its valuation appears full in the current industry environment.
Morgan Stanley expressed particular concern about Progressive’s 2027 earnings outlook, where the firm projects earnings per share could decline year-over-year.
In other recent news, Progressive Corporation reported a significant surge in net income for May 2025, with an increase of 353% to $1.07 billion compared to the same period last year. The company’s earnings per share reached $1.81, a notable rise from $0.40 in the previous year. Net premiums written grew by 11% to $6.63 billion, while net premiums earned increased by 15% to $6.72 billion. Barclays (LON:BARC) maintained its Equalweight rating for Progressive with a $297.00 price target, highlighting the company’s strong underwriting results and better-than-expected expense discipline.
Keefe, Bruyette & Woods reiterated a Market Perform rating for Progressive, raising its 2025 and 2026 earnings per share estimates due to improved investment income growth and reserve releases. Raymond (NSE:RYMD) James maintained an Outperform rating, with a $305.00 price target, citing confidence in Progressive’s combined ratio and potential for industry-leading return on equity by 2027. Despite these positive developments, analysts noted potential challenges, such as short-term pressure on the core loss ratio and a deceleration in policy-in-force growth. The company’s combined ratio, a key measure of profitability, showed improvement, indicating strong operational efficiency.
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