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Investing.com - Morgan Stanley downgraded Progressive Corp. (NYSE:PGR), a $132.3 billion market cap insurance giant with 18.35% revenue growth, from Equalweight to Underweight and lowered its price target to $214.00 from $265.00 on Monday.
The downgrade comes as Morgan Stanley expects Progressive to enter a softer part of the pricing cycle, which could lead to multiple compression despite the stock’s seemingly attractive forward P/E multiple of approximately 13x. According to InvestingPro analysis, the stock appears slightly undervalued at current levels, with a current P/E ratio of 12.17x.
Morgan Stanley noted that the cyclical nature of Progressive’s business suggests earnings per share will decline in 2026 and 2027, making valuation based on normalized earnings more appropriate than current forward estimates.
When valued on normalized earnings with a combined ratio of 92%, Progressive stock is "not cheap at the current valuation around 14x to 16x forward P/E," according to the research firm’s analysis.
The new price target of $214 per share implies a 2026 estimated P/E multiple of 12.6x, which Morgan Stanley indicated would be "marginally below historical norms." Progressive maintains strong financial health with an overall score of 3.34 out of 5 based on InvestingPro metrics.
In other recent news, Progressive Corp. has been the subject of various analyst evaluations, highlighting shifts in price targets and market performance expectations. Raymond James adjusted its price target for Progressive to $265, maintaining an Outperform rating, while BMO Capital lowered its target to $247, citing persistent soft pricing-power conditions in the insurance industry. Wells Fargo also reduced its price target to $246, pointing to slowing growth in personal auto policies and a weaker loss ratio. Evercore ISI decreased its target to $250, noting increased competition and a decline in premium per policy. In contrast, Keefe, Bruyette & Woods raised its price target slightly to $270, following Progressive’s August 2025 earnings report, which led to an upward revision of earnings per share estimates. These recent developments underscore differing perspectives among analysts regarding Progressive’s financial outlook and competitive positioning in the market.
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