Morgan Stanley Upgrades Progressive Corp. (PGR) to Equalweight

Morgan Stanley upgraded Progressive Corp. (NYSE: PGR) from Underweight to Equalweight with a price target of $36.00 (from $31.00).

Morgan Stanley's Kai Pan wrote: "PGR's 2016e combined ratio of 95.3% was close to the company's upper limit of 96% and higher than 93.4% average in 2011-15. Growth in top-line results in new business "penalty" driving higher loss ratio picks and pressuring margins and ROE. We note that from 2010-16e, premium growth and loss ratio deterioration (moving higher) have moved in lockstep. In 2014-16, NWP grew on average +10%, while accident year loss ratio (ex. cats) deteriorated ~140bps. For 2017e, we expect premium growth to slow to +8%, resulting in less drag from new business "penalty." Additionally, deteriorating commercial auto, and elevated cat losses negatively impacted combined ratio in 2016."

For an analyst ratings summary and ratings history on Progressive Corp. click here. For more ratings news on Progressive Corp. click here.

Shares of Progressive Corp. closed at $35.85 yesterday.

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