On Monday, Jefferies updated its stance on Lemonade Inc . (NYSE:LMND), increasing the price target on the company's shares to $20.00 from the previous $17.00. Despite the raised target, the firm maintained its Underperform rating on the stock. The insurance technology company, currently trading at $45.91, has shown remarkable momentum with a 213% surge over the past six months.
The adjustment follows Lemonade's recent investor day, which put a spotlight on the company's growth and its foray into the auto insurance market. Following the event, Jefferies revised its revenue projections upward for Lemonade.
The company has demonstrated strong revenue growth of 22% over the last twelve months, reaching $492.5 million. However, the firm simultaneously lowered its expectations for adjusted EBITDA and loss per share (LPS) figures for the insurance tech company, which aligns with InvestingPro's comprehensive analysis showing the company remains unprofitable with an EBITDA of -$186 million.
In the report, Jefferies pointed out that there are still outstanding questions to management that need to be addressed. These inquiries pertain to various aspects of Lemonade's business and operational strategies, which the analyst firm believes are crucial for a more comprehensive understanding of the company's future prospects.
The revised price target of $20.00 implies a significant downside of 61% from the stock's current trading level, signaling that Jefferies holds a cautious view on the stock's potential for growth despite acknowledging the company's expansion efforts.
In other recent news, Lemonade Inc. has seen several adjustments in analysts' outlooks. JMP Securities raised their price target for Lemonade from $40 to $60, maintaining a Market Outperform rating, while Piper Sandler and Morgan Stanley (NYSE:MS) also increased their price targets, keeping a neutral rating. BMO Capital raised its price target too, but maintained an underperform rating.
Lemonade's third-quarter financials show significant growth, with in-force premiums rising by 24% to $889 million, customer count increasing by 17% to 2.3 million, and gross profit surging 71% year-over-year to $37 million. The company also outlined ambitious growth plans during its investor day, with a roadmap to longer-term profitability and an estimation to grow its in-force premium to $10 billion in the coming years.
Analysts project further improvements for Lemonade, with Q4 2024 in-force premium projections being between $940 million to $944 million, and revenue projections being $144 million to $146 million. The company aims to achieve consistent positive cash flow from operations by the end of 2024.
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