In This Article:
What the stock market gives, the stock market can take away. A mere one day after Progressive (NYSE: PGR) delivered first-quarter results that satisfied investors, a recommendation downgrade by an analyst on Thursday made the stock something of a pariah.
It closed that session almost 4% lower, on a day when the benchmark S&P 500 index managed to crawl 0.1% higher.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Going down with a downgrade
I should mention that several analysts weighed in with bullish takes on Progressive's earnings on Thursday, with no less than three raising their price targets on the insurance company's stock.
As we all know, however, it sometimes takes only one guest to spoil the party. Well before market open today, Meyer Shields -- a pundit at Keefe, Bruyette & Woods, part of Stifel Financial -- made the downgrade. For him, the company now rates a market perform (hold, in other words) where previously it was an outperform (buy). Shields maintained his price target of $288 per share.
His somewhat contrarian move was based on trends that he said he has noted with the business, according to reports. He wrote in his latest research note that the growth of its in-force auto policies will slow, due in no small part to moderating rate increases from competitors. Shields also expressed concern that Progressive's earned rates will come under pressure from increased claims.
The right side of the road
In this instance, I'd be more likely to side with the analysts who bumped up their price targets rather than the downgrading party. Progressive's management has shown flair in finding fresh ways to grow, so I think pressure in its core activities will be mitigated by other sources of revenue and profitability. This stock feels like a buy to me these days.
Should you invest $1,000 in Progressive right now?
Before you buy stock in Progressive, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Progressive wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $518,599!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $640,429!*
Now, it’s worth noting Stock Advisor’s total average return is 791% — a market-crushing outperformance compared to 152% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.