On Tuesday, Progressive Corp. (NYSE: NYSE:PGR) stock received a price target increase from Goldman Sachs (NYSE:GS), elevating the target to $280 from the previous $262, while retaining a Buy rating. The adjustment reflects anticipated improvements in Progressive's personal auto insurance business, specifically in policy-in-force (PIF) growth and underlying loss ratio expectations.
The firm revised its model for Progressive based on several factors. Key among these is a positive shift in PIF growth and a better-than-expected underlying loss ratio in the personal auto segment. These favorable changes, however, are partially balanced by a raised expense ratio assumption for personal lines, attributed to a slight uptick in projected advertising spend and its efficiency in the near term.
Goldman Sachs' analysts have expressed confidence in the sustainability of recent loss cost trends, which have outperformed earlier projections. This optimism is reflected in the revised earnings per share (EPS) estimates for Progressive, which have been increased by 13% for 2024, and by 3% for both 2025 and 2026. The substantial hike in the 2024 EPS forecast is largely due to an earnings beat reported in August.
The new stock price target of $280 represents an 11% total return potential over the next 12 months, according to Goldman Sachs' analysis. The updated target is a 7% increase from the previous target, indicating a favorable outlook for Progressive's financial performance in the coming years.
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