Just a day after Progressive (PGR) delivered first-quarter results that pleased investors, the company’s stock saw a significant drop following a downgrade by an analyst on Thursday. The stock closed the session almost 4% lower, even as the benchmark S&P 500 index saw a slight increase of 0.1%.
Several analysts provided positive feedback on Progressive’s earnings on Thursday, with at least three increasing their price targets for the insurance company’s stock. However, a single dissenting opinion swayed the market sentiment. Before the market opened, Meyer Shields, an analyst at Keefe, Bruyette & Woods, part of Stifel Financial, downgraded Progressive’s rating from outperform (buy) to market perform (hold), while maintaining his price target of $288 per share.
Shields’ decision was based on observed trends affecting the company. He noted that the growth of Progressive’s in-force auto policies is expected to slow, attributed mainly to more modest rate increases from competitors. Furthermore, Shields expressed concerns about the pressure on Progressive’s earned rates due to a rise in claims.
Despite the downgrade, some analysts remain optimistic about Progressive, citing the company’s innovative management strategies and potential for growth through alternative revenue streams and profitability.
