Progressive Corp. Delivers Mixed Q2 Results; Shares Fall

Shares of Progressive Corp. (PGR) fell 2.57% after the insurance company reported mixed second-quarter results. In Q2, earnings per share came in at $1.34 per share, better than the $1.08 per share expected by analysts. However, it was a 56% decline from earnings per share of $3.04 reported in the same period last year.

Q2 revenue, on the other hand, came in at $11.48 billion, missing consensus estimates of $11.52 billion but up 13% year-over-year. (See Progressive Corp. stock charts on TipRanks)

For June, EPS came in at $0.22, a 72% decline from $0.80 reported the same month last year. However, revenue was up year-over-year to $3.6 billion from $3.2 billion reported the same month last year.

Yesterday Wells Fargo analyst Elyse Greenspan reiterated a Sell rating on the stock and lowered her price target to $87 from $90, implying 8.37% downside potential to current levels. The price cut comes on the back of the insurance company missing estimates.

Operating EPS for the month (June) came in at $0.06, missing the analyst’s estimate of $0.38. Additionally, premiums in the month rose 13.3%, much lower than 15.2% expected. Consequently, the firm has lowered its 2021 EPS estimate to $4 from $5.14, reflecting the June earning miss and higher underlying loss ratios.

“We have an Underweight rating on the shares. As Covid-19 vaccines are rolled out and driving picks up frequency should revert back to more normalized levels, causing margin compression for PGR in 2021. Further, PGR’s policy growth should slow as there is less shopping in the market as virtually no players are pushing for rate due to the extremely low level of losses seen in 2020,” Greenspan said.

Consensus among analysts is a Hold based on 3 Buys, 2 Holds, and 2 Sells. The average Progressive Corp. price target of $107.50 implies 13.22% upside potential to current levels.

PGR scores a 3 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to underperform market averages.

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