Key Points
Two analysts weighed in with fresh takes on the company.
One initiated coverage with a buy, and the other upped his price target.
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The stock market was hardly sour on Lemonade (NYSE: LMND) stock on Wednesday. On the back of two positive analysts moves on the next-generation insurer, its share price zoomed to an over 9% gain during that day’s trading session. In reaching that height it blew past the S&P 500 index, which only mustered a 0.3% increase.
Boosting the buy case
Of the pair, one was an initiation of coverage, and the other a price target increase by a researcher that’s been following Lemonade stock for some time.
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The initiating individual was Cantor Fitzgerald’s Ryan Tunis, who after market close Tuesday launched coverage of Lemonade with an overweight (buy, in other words) recommendation. Tunis set his price target at $60 per share for the stock.
The following day, Jefferies‘ Andrew Andersen raised his existing price target on the shares. He now believes they are worth $37 apiece, quite some distance north of his previous $30 estimation. That was the good news for Lemonade; the bad is that Andersen left his underperform (sell) rating unchanged.
According to reports, the analyst’s bump was due in no small to the company’s higher premium retention; this should spur revenue growth for the company. On the down side, Andersen expressed concern that Lemonade was taking on more leverage, an activity that can hamper fundamentals if not managed effectively.
Not yet tasting good
While Lemonade is an innovative company in numerous ways, personally I’d be concerned about its propensity for bottom-line losses. Until and when it can prove that it can not only book a profit but do so with some consistency, I will remain wary of the stock.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group and Lemonade. The Motley Fool has a disclosure policy.
