Story updated at 9:55 a.m. to reflect market activity.
Shares of Progressive gained 0.6% to $25.17 in morning trading.
The analyst firm set a price target of $28 for the company. Personal insurers like Progressive should outperform in the near term, according to Goldman Sachs analysts.
"We are upgrading PGR to Buy and raising our 12-month price target to $28 on our view of strength in personal lines, a surprisingly strong capital deployment story, and seasonal strength for PGR's recreationally-heavy book of exposures," analyst Michael Nanizzi wrote. "Although competition is heating up in PGR's Agency business, we believe the downside risk is manageable given our otherwise favorable view."
TheStreet Ratings team rates PROGRESSIVE CORP-OHIO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PROGRESSIVE CORP-OHIO (PGR) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PGR's revenue growth trails the industry average of 19.9%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.33, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Insurance industry and the overall market, PROGRESSIVE CORP-OHIO's return on equity exceeds that of both the industry average and the S&P 500.
- PROGRESSIVE CORP-OHIO's earnings per share declined by 9.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PROGRESSIVE CORP-OHIO increased its bottom line by earning $1.94 versus $1.48 in the prior year. For the next year, the market is expecting a contraction of 14.9% in earnings ($1.65 versus $1.94).
- In its most recent trading session, PGR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: PGR Ratings Report
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