On Monday, Goldman Sachs maintained its Neutral rating on Progressive Corp. (NYSE: NYSE:PGR) with a steady price target of $292.00. The firm's analysis incorporated several adjustments to its model, including an improved outlook for policy-in-force (PIF) growth and the underlying loss ratio in the personal auto segment. Additionally, the firm raised its near-term expectations for the personal lines expense ratio, factoring in a modest increase in projected advertising spend and efficiency.
The revisions to Goldman Sachs' model also reflect updated October catastrophe loss estimates, which now include Progressive's $325 million insured loss estimate from Hurricane Milton. The adjustments in the model are expected to impact the company's earnings per share (EPS) estimates for the coming years, with a slight decrease for 2024, a minor increase for 2025, and no change for 2026.
Goldman Sachs' updated assessment of Progressive's investment income was influenced by new assumptions regarding short-to-medium term fixed income yields. These changes are part of a broader evaluation of market conditions and the sustainability of recent trends in underlying loss ratios, particularly within the personal auto insurance sector.
Despite these modifications, Goldman Sachs has chosen to maintain its 12-month target price for Progressive at $292. This target suggests an 18% total return potential from the current levels. The firm's stance remains neutral as it continues to monitor the company's performance and market dynamics that could influence the insurer's financial outcomes.
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