Progressive Corp. (PGR) PT Raised to $247 at Morgan Stanley

Morgan Stanley analyst Bob Huang raised the price target on Progressive Corp. (NYSE: PGR) to $247.00 (from $228.00) while maintaining a Overweight rating.

The analyst comments "March key metric: Durable combined ratio, increase EPS and PT. Heading into the March results, we believe the investment community is more focused on how combined ratio will trend for rest of the year. Given the growth trajectory year-to-date, we see the potential for high 80s to low 90s combined ratio to be much more durable than previously expected. Although CAT losses could result in ~2 points of headwind for the month, we continue to see solid loss ratio. While expenses are likely to ramp higher, the overall expense ratio remains manageable given overall growth rate and marketing spend. We expect expense ratio of 18.2% in March, and a loss ratio of 72.8%%, down from 76.2% previously to be more aligned with the current underwriting trend. Although the company targets sub 96% combined ratio, we see 2024 and 2025 as years where they are likely to outperform this metric. While some investors feel that there is upside potential for $12/shr EPS in 2024 given the current trajectory, this is not our base case. We increase our 2024e and 2025e EPS to $11.26/$12.66 respectively on more sustained underwriting profitability and prolonged growth environment. We also increase our PT by ~8% to $247. We are optimistic about the longer term growth of the company, and thus continue to Overweight the stock."

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