Morgan Stanley Downgrades The Progressive Corporation (PGR) Stock to Equal Weight

The Progressive Corporation (NYSE:PGR) is one of the Best Large Cap Value Stocks to Invest In. Morgan Stanley analyst Bob Huang downgraded the company’s stock to “Equal Weight” from “Overweight” with a price objective of $290, down from the prior target of $330, as reported by The Fly. The downgrade exhibits the firm’s view that The Progressive Corporation (NYSE:PGR)’s previous investment thesis of unincumbered growth and margin expansion has been nearing its end.

Morgan Stanley Downgrades The Progressive Corporation (PGR) Stock to Equal Weight

A team of accountants in a boardroom, discussing strategic moves of an insurance company.

Overall, the firm identified 2 critical factors which have changed the outlook: the intensifying industry competition, and the pressure on The Progressive Corporation (NYSE:PGR)’s valuation as it exits the peak growth and margin environment.  In Q1 2025, the company had strong policies in force (PIF) growth, with ~5.5 million more PIFs as compared to the end of the first quarter last year, resulting in the total PIF count to more than 36 million as of March 31, 2025. The Progressive Corporation (NYSE:PGR) remains focused on improving profitability and reducing exposure in markets that are more susceptible to catastrophic weather events.

Fitch Ratings believes that The Progressive Corporation (NYSE:PGR) maintains a favorable business profile, with continued growth in market share. Also, the firm highlighted that The Progressive Corporation (NYSE:PGR) remains one of the most consistently profitable underwriters across leading property/casualty (P/C) insurers, possessing a history of favorable underwriting margins and stability.

Madison Investments, an investment advisor, released its Q1 2025 investor letter. Here is what the fund said:

“The Progressive Corporation (NYSE:PGR) continues to deliver industry-leading policy growth with better-than-expected underwriting margins. Total revenue growth of 22% in the month of December 2024 reflects ongoing market share gains for the company. Overall, 2024 was a solid year for Progressive with net premium revenue growth of 21% and strong profitability with a combined ratio of 88.8%. Progressive is gaining share versus its competitors with industry leading segmentation, claims accuracy, and competitive pricing. The company’s accurate claims handling is key to its competitive pricing. Balancing efficient and accurate claim outcomes with strong customer satisfaction have been the drivers of the company’s strong results.”

While we acknowledge the potential of PGR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PGR and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.