CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We lift our 12-month target price by $15 to $160, or 21.3x our 2024 operating EPS estimate of $7.50 and 17.4x our 2025 EPS estimate of $9.20, versus PGR’s five-year average forward multiple of 18x and a peer average of 10x. We up our 2023 EPS estimate by $0.32 to $5.05. We calculate Q3 operating EPS to be $1.97 versus $0.53, above our $1.47 EPS estimate, the $1.71 consensus view, on 20% higher earned premiums and improved underwriting results, evidenced by the Q3 combined ratio of 92.4% versus 99.2%. We note YTD loss costs rose 21%, still outpacing the 18% rise in YTD premiums, though the rise in loss costs is moderating. We now see 15%-18% operating revenue growth in 2023, driven mainly by 12%-18% higher premiums, as PGR retains pricing power amid ongoing (albeit easing) claim cost inflation. We think PGR’s above-peer growth and best-in-class underwriting analytics will enable the shares to retain their premium valuation to peers; at current levels, we view the shares as fairly valued but worth holding.