Progressive Corporation (NYSE:PGR) continues to deliver operating results that exceed expectations, even as its stock trails the broader market amid a growing bearish narrative around the auto insurance sector.
Earnings Strength Underscores Fundamental Resilience
In 2025, Progressive reported operating earnings per share of $18.27, well above the consensus estimate of $15.58, driven by robust personal auto policy growth. The outperformance came despite the stock's 23% decline since April 2025, a disconnect that highlights the gap between market sentiment and operating performance.
Bank of America Securities analyst Joshua Shanker on Monday reiterated a Buy rating on the stock while modestly trimming his price forecast to $329 from $334. The adjustment reflects a lower market valuation multiple rather than a change in Progressive's underlying outlook. Despite share underperformance, the company has consistently beaten earnings and growth expectations.
Tort Reform and Autonomous Vehicles Seen as Tailwinds
Shanker pointed to Florida's tort reform as a clear positive, noting it has already reduced claims costs, lowered litigation frequency, and improved underwriting margins. He also challenged the bearish view that self-driving cars pose a structural threat to auto insurers. Instead, he argues autonomous vehicles could enhance capital utilization and underwriting efficiency, particularly for insurers with scale and data advantages.
Consensus Estimates Viewed as Too Conservative
Looking ahead, Shanker expects Progressive to exceed consensus again in the first quarter of 2026. His policy growth forecast of 3.5% compares with the Street's 2.5% estimate and aligns with historical seasonality, which typically favors stronger first-quarter growth.
The revised $329 price forecast is based on a 19.2x price-to-earnings multiple applied to normalized 2028 EPS of $17.12. While near-term stock volatility persists, the analyst views Progressive as well-positioned to continue outperforming expectations, supported by strong execution, regulatory tailwinds, and technology-driven efficiency gains.
PGR Price Action: Progressive shares were down 0.09% at $202.10 at the time of publication on Monday. The stock is near its 52-week low of $197.92, according to Benzinga Pro data.
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