MOST NOTEWORTHY:

• Wachovia upgraded Progressive (NYSE: PGR) to Market Perform from Underperform based on modest signs of improvement in underwriting trends.
  
• Lehman upgraded Netflix (NASDAQ: NFLX) to Overweight from Equal Weight based on strong core trends and a potential announcement of digital service partners into its May 28 investor day.
  
• Credit Suisse upgraded Public Service Enterprise Group (NYSE: PEG) to Outperform from Neutral based on earnings growth through utility investment, valuation, upside from U.S. CO2 policy.

• Precision Drilling (NYSE: PDS) was raised to Outperform from Sector Perform at RBC Capital.
  
• Hertz Global (NYSE: HTZ) was upgraded at Soleil to Buy from Hold.
  
• Calyon upgraded Foundation Coal (NYSE: FCL) and Arch Coal (ACI) to Add from Neutral.

Analyst upgrades: PGR, NFLX, PDS, HTZ, FCL and PEG originally appeared on BloggingStocks on Tue, 20 May 2008 11:30:00 EST. Please see our terms for use of feeds.

AP reports that Liberty Mutual, the nation's largest provider of workers' compensation insurance and its sixth largest property-casualty insurer, is buying Safeco (NYSE: SAF) for $6.1 billion, a 51% premium over Tuesday's close.

Having spent years working for Liberty Mutual in the 1990s -- part of it for Gary Gregg, who heads the Agency Markets unit that will manage Safeco -- I know that this deal may well be the largest in its history. Safeco sells $5.9 billion in insurance policies a year, while Liberty booked annual premiums of $20.2 billion. Safeco has posted poor earnings and its stock has tumbled recently. Bloomberg News reports that Safeco's auto unit posted a loss at the end of 2007 because of rising medical claims and repair costs, leading to a 33% decline in fourth-quarter profit and a 19% decline in its stock in 2008 before this morning's announcement.

It looks like there will be more consolidation in the personal lines property casualty industry. Seventy one percent of analysts tracking insurers of homes, cars and businesses expect a "significant increase" in mergers in 2008, according to an Accenture (NYSE: ACN) report based on 108 stock analysts in December and January. Candidates for acquisition could include Progressive Corp. (NYSE: PGR), Mercury General (NYSE: MCY), The Hanover Insurance Group (NYSE: THG), and The Commerce Group (NYSE: CGI).

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Liberty Mutual buys Safeco at a 51% premium, who's next? originally appeared on BloggingStocks on Wed, 23 Apr 2008 11:35:00 EST. Please see our terms for use of feeds.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Acuity Brands Inc. (NYSE: AYI) beat second-quarter estimates on increased productivity and new products.
• Advanced Micro Devices (NYSE: AMD) cut its outlook and announced job cuts.
• Alcoa Inc. (NYSE: AA) missed first-quarter earnings estimates but beat revenue expectations.
• Circuit City Stores Inc. (NYSE: CC) surprised Wall Street by posting a second-quarter profit.
• Dell Inc.'s (NASDAQ: DELL) rosy 2008 forecast is based on cost cuts, overseas growth, share buybacks.
• DuPont & Co. (NYSE: DD) raised its first-quarter outlook on strength in agriculture and emerging markets.
• Eastman Chemical Co. (NYSE: EMN) raised its first-quarter guidance on strong sales and higher prices.
• EXFO Electro-Optical Engineering (NASDAQ: EXFO) beat estimates and announced an acquisition.
• Foundry Networks Inc. (NASDAQ: FDRY) slashed its first-quarter outlook, blaming the weak economy.
• Genentech Inc. (NYSE: DNA) beat first-quarter earnings estimates, but not revenue expectations.
• General Electric Co. (NYSE: GE) missed earnings expectations and lowered its guidance.
• Novellus Systems Inc. (NASDAQ: NVLS) trimmed its first-quarter earnings and revenue forecasts.
• Progressive Corp. (NYSE: PGR) beat estimates though first-quarter profits fell due to lower premiums.
• Rite Aid Corp. (NYSE: RAD) swung to a loss in the fourth quarter on acquisition costs and a tax charge.

Continue reading Earnings highlights: GE, Alcoa, Circuit City, UPS, Dell, DuPont, AMD and others

Earnings highlights: GE, Alcoa, Circuit City, UPS, Dell, DuPont, AMD and others originally appeared on BloggingStocks on Sat, 12 Apr 2008 17:40:00 EST. Please see our terms for use of feeds.

Progressive Corp. (NYSE: PGR) shares are trading higher after the company announced this morning its first quarter profit dropped 34% to $239.4 million, hurt by lower premiums. However, PGR posted earnings of 35 cents per share, exceeding analysts' estimates for a quarterly profit 29 cents per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on PGR.

After hitting a one-year high of $25.16 in June, the stock hit a one-year low of $15.00 in March. PGR opened this morning at $16.70. So far today the stock has hit a low of $16.70 and a high of $17.39. As of 12:25, PGR is trading at $17.25, up $0.65 (3.9%). The chart for PGR looks bearish and steady while S&P gives PGR a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 16.3% return in just four months as long as PGR is above $15 at August expiration. Progressive would have to fall by more than 27% before we would start to lose money. Learn more about this type of trade here.

Continue reading Progressive (PGR) rises after earnings beat estimates

Progressive (PGR) rises after earnings beat estimates originally appeared on BloggingStocks on Wed, 09 Apr 2008 13:18:00 EST. Please see our terms for use of feeds.

Continue reading George Soros and auto insurance industry profits

George Soros and auto insurance industry profits originally appeared on BloggingStocks on Mon, 19 Nov 2007 18:45:00 EST. Please see our terms for use of feeds.

The total amount spent on pets in the U.S. is staggering -- $40 billion and climbing. That amount would make any bean counter salivate, and Progressive's bean counters are no different. With 150 million pets in this country, why not seize a piece of that action with coverage for that special pet? Where others saw insanity, Progressive saw a huge market opportunity.

Continue reading Progressive Insurance adds pets to auto policies

Progressive Insurance adds pets to auto policies originally appeared on BloggingStocks on Mon, 12 Nov 2007 14:16:00 EST. Please see our terms for use of feeds.

• Madonna, the original material girl, is signing a 10-year $120M deal with concert promoter Live Nation (NYSE: LYV), leaving Warner Music Group (NYSE: WMG) in her wake, reported the Wall Street Journal.
• According to the Wall Street Journal's "Heard on the Street" column, Progressive Corporation (NYSE: PGR) is struggling due to competitors' pricing, safer cars, and a struggling economy, to name a few factors.
• The Financial Times reported that General Electric Company (NYSE: GE) will decide whether to sell its 80% stake in NBC Universal after the Beijing Olympics in August 2008, according to sources.
• Tenaris (NYSE: TS), the maker of steel pipes for oil and gas exploration, has ruled out any possible sale of itself to ArcelorMittal (NYSE: MT) , the world's biggest steel producer, reported the Financial Times.

• The New York Post reported that UBS AG (NYSE: UBS) has fired David Martin, its head of interest-rate trading, and James Stehli, the head of its collateralized debt obligation unit, due to the fallout from the mortgage meltdown.
• BP PLC (NYSE: BP) CEO Tony Hayward will today unveil plans to reduce bureaucracy and duplication of management at the oil giant, reported the Telegraph.

Newspaper wrap-up: Madonna headed to Live Nation originally appeared on BloggingStocks on Thu, 11 Oct 2007 09:15:00 EST. Please see our terms for use of feeds.

• Deutsche Bank downgraded REITs AvalonBay (NYSE: AVB), Boston Properties (NYSE: BXP), Health Care REIT (NYSE: HCN), Kimco (NYSE: KIM) and Public Storage (NYSE: PSA) to Hold from Buy on valuation following the recent share appreciation.
  
• Business Objects (NASDAQ: BOBJ) was downgraded to Neutral from Outperform at Baird following its acquisition by SAP AG (NYSE: SAP).
  
• Wachovia downgraded Allstate Corporation (NYSE: ALL) to Market Perform from Outperform and P&C Insurance (NYSE: PGR) citing deteriorating fundamentals in personal lines.

• UBS downgraded BEA Systems (NASDAQ: BEAS) to Neutral from Buy.
  
• JP Morgan downgraded Merrill Lynch (NYSE: MER) to Neutral from Outperform.
  
• Sealy Corporation (NYSE: ZZ) was downgraded to Neutral from Buy at Banc of America.
  
• Friedman Billings downgraded technology stocks, lowering ASE Test Limited (NASDAQ: ASTSF), ASML Holding (NASDAQ: ASML), KLA-Tencor (NASDAQ: KLAC) and Rudolph Technologies (NASDAQ: RTEC) to Market Perform from Outperform.

Analyst downgrades: REITs, BOBJ, ALL and PGR originally appeared on BloggingStocks on Mon, 08 Oct 2007 11:05:00 EST. Please see our terms for use of feeds.

In his second quarter letter to The Progressive Corporation (NYSE: PGR) shareholders, CEO Glenn Renwick admits the quarter was weak, the numbers are not where the company wants them, but there are signs of progress slowly emerging. Might as well get the bad news all out on the table so shareholders know what they are dealing with. One has to admire the CEO's honesty.

Progressive Corp. of Ohio is an insurance company that writes policies for personal and commercial drivers, as well as policies for motorcycles and personal watercraft for recreational use. Consumers might recognize Progressive from its commercials in which it provides a potential customer not only with its own rates but also the rates of competitors and admits that sometimes Progressive is not the cheapest but does provide superior claims service. Turns out, lots of customers really do want the cheapest coverage possible.

Thus, Progressive's net income declined 29% in the second quarter because the company wrote fewer policies and had to discount premium prices on policies it did write. CEO Renwick believes most of the discounting has already been done and he looks for premiums to rise although Progressive remains very sensitive to price comparisons with its competitors.

Continue reading Progressive (PGR) may start finally progressing

Progressive (PGR) may start finally progressing originally appeared on BloggingStocks on Fri, 17 Aug 2007 14:30:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Goldman downgraded shares of Continental Airlines, Inc (NYSE: CAL) to Neutral from Buy on valuation, higher oil prices and a weak domestic market.

• Goldman also downgraded Molson Coors Brewing Co (NYSE: TAP) to Neutral from Buy based on the increase in analyst estimates, valuation and the potential for margin pressure in the summer.

• BB&T cut Watsco, Inc (NYSE: WSO) to Hold from Buy based on valuation and catalysts that are already reflected in the share price.

• Roth Capital downgraded shares of K-V Pharmaceutical Co (NYSE: KV.A) to Hold from Buy, telling clients they have learned that Par Pharmaceuticals Cos (PRX) has launched generics of 50, 100 and 200mg Toprol-XL. The firm expects a material impact to KV's 100 and 200mg strength generics.

• Stifel expects investor enthusiasm regarding Progressive's Corp (NYSE: PGR) recapitalization plan to fade as underwriting fundamentals deteriorate and cut shares to Sell from Hold.

• Color Kinetics (NASDAQ: CLRK) was downgraded to Hold from Sell at Needham on valuation...

• Citigroup cut The Phoenix Co's (NYSE: PNX) to Hold from Buy.

• KeyBank downgraded Lubrizol Corp (NYSE: LZ) to Hold from Buy.

• Goldcorp Inc (NYSE: GG) and Freeport-McMoRan Copper & Gold Inc (NYSE: FCX) were downgraded to Market Perform from Outperform at BMO Capital.

• Susquehanna downgraded Build-A-Bear Workshop, Inc (NYSE: BBW) to Neutral from Positive.

Analyst downgrades 6-15-07: BBW, CAL, FCX, PGR and TAP originally appeared on BloggingStocks on Fri, 15 Jun 2007 11:10:00 EST. Please see our terms for use of feeds.

America is a "sue-happy" country. Where else can you sue the dry cleaners for $54 million because they lost your Hickey Freeman pants. You think I am joking; but this is a case of life being stranger than fiction. A Washington DC judge (who in my opinion should know better) is suing a dry cleaners that lost his pair of pants.

For a moment last week my trust in the American legal system began to fail as Paris Hilton, heiress of Hilton Hotels (NYSE: HLT) fortune, spent a heart-wrenching three days in jail before being released by the sheriff for "medical reasons." Then suddenly my faith was restored as the judge sent her back to jail.

Well it didn't last long. It seems this week a pair of lost pants is worth crying over -- and $54 million. I guess America is land of the free and home of too many lawyers. Maybe this is why I respect Vice President Cheney: I mean, we all talk about the problem with lawyers, but at least he shot one.

Continue reading Lawyers and the $54 million pants

Lawyers and the $54 million pants originally appeared on BloggingStocks on Wed, 13 Jun 2007 14:45:00 EST. Please see our terms for use of feeds.

Continue reading Buffett's big buy: Our top picks include Allstate, Lowe's, Target

Buffett's big buy: Our top picks include Allstate, Lowe's, Target originally appeared on BloggingStocks on Fri, 11 May 2007 20:49:00 EST. Please see our terms for use of feeds.