Progressive’s Profit Soars 142% in November; Analyst Lifts PT

Progressive Corp. reported triple-digit earnings growth in November, both on a year-over-year and sequential basis. The insurance company’s earnings per share last month surged about 142% to $1.26 from $0.52 year-on-year.

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Progressive’s (PGR) EPS in November soared 215% from the $0.40 posted in October.

During the reported period, the company’s net premium earned rose 11% year-over-year, while premium written grew 14% over the same period. Combined ratio (percentage of premiums paid out as claims and expenses) declined to 86.6 in November from 94.1 in the prior-year period. Progressive’s policies-in-force in November were 11% higher than in the year-ago period.

The company said, “Excluding the impact of catastrophe losses in both November 2020 and 2019, our companywide loss/LAE ratio was 6.1 points lower than November last year, in part reflecting continued lower auto accident frequency on a year-over-year basis.” (See PGR stock analysis on TipRanks)

Wells Fargo analyst Elyse Greenspan raised the stock’s price target from $96 to $99 (2.1% upside potential) and maintained a Hold rating. Greenspan noted that the November results reflect “continued favorable frequency benefits in early 2021 and stronger NPW [net premium written] growth in commercial auto.” The analyst said, “The earnings beat was counter-balanced by the slowdown in PIF [policies-in-force].”

She added, “We are seeing rate declines in the personal auto sector and the level of rate should slow as the industry factors in the Covid-19 favorable frequency levels. Further, as miles driven rebound from Covid-19 lows the favorable frequency trends should subside from here.”

Meanwhile, most of the Street is in line with Wells Fargo’s outlook with a Hold analyst consensus. That’s based on 5 Holds, 2 Buys and 1 Sell. The average price target stands at $97.38 and implies that shares are fully priced at current levels. Shares have gained 33.9% year-to-date.