On Thursday, Piper Sandler adjusted its price target on shares of Lemonade Inc . (NYSE:NYSE:LMND), increasing it from $25.00 to $44.00, while maintaining a Neutral rating on the stock. The revision follows Lemonade's investor day held in New York City, which was the company's second such event and its first since the inaugural investor day in 2022.
During the event, Lemonade outlined its financial targets for fiscal year 2025 (FY25) and beyond, including the company's roadmap to longer-term profitability. Key takeaways from the investor day included Lemonade's expectation to achieve adjusted free cash flow profitability for the full year in FY24, reach adjusted EBITDA breakeven by the end of FY26, and net income breakeven in FY27.
Lemonade also shared its ambitious growth plans, with management estimating the potential to grow its in-force premium (IFP) to $10 billion in the coming years. The company highlighted its Lemonade Car insurance product and provided demonstrations of product and user experience enhancements.
Looking ahead to FY25, Lemonade anticipates delivering more than 50% growth in adjusted gross profit, ramping up its growth spend by approximately 40%, and achieving around $1.2 billion in in-force premium. Piper Sandler's revised price target reflects these updated company projections and growth strategies.
In other recent news, Lemonade Inc. has experienced significant growth in its third-quarter financials. The company's in-force premiums rose by 24% to $889 million, and its customer count increased by 17% to 2.3 million. Gross profit saw a substantial surge of 71% year-over-year to $37 million, and net cash flow reached $48 million. These recent developments also include Lemonade's strategic plans for expansion, particularly in auto insurance.
Analysts from various firms, including BMO (TSX:BMO) Capital, and Morgan Stanley (NYSE:MS) have adjusted their outlooks on Lemonade. BMO Capital raised its price target for Lemonade to $15, while maintaining an Underperform rating.
Morgan Stanley upgraded Lemonade's stock rating from Underweight to Equal-weight, following the company's investor day. Piper Sandler raised its price target for Lemonade, while maintaining a neutral rating.
Analysts project further improvements in 2026, with Lemonade's Q4 2024 in-force premium projection being between $940 million to $944 million, and revenue projection being $144 million to $146 million. The company aims to achieve consistent positive cash flow from operations by the end of 2024. These projections and recent financial growth indicate a strong trajectory for Lemonade in the insurance technology sector.
InvestingPro Insights
Lemonade's ambitious growth plans and financial targets, as outlined in their recent investor day, are reflected in the company's recent market performance. According to InvestingPro data, Lemonade has shown impressive price returns across various timeframes, with a 150.56% return over the past month and a 190.76% return over the past year. This strong momentum has pushed the stock to trade near its 52-week high, with the current price at 96.74% of that peak.
However, investors should note that Lemonade's rapid stock appreciation has led to some potentially concerning valuation metrics. The company's Price to Book ratio stands at 5.61, which InvestingPro Tips flag as trading at a high multiple. Additionally, an InvestingPro Tip indicates that the stock's RSI suggests it may be in overbought territory.
While Lemonade projects future profitability, it's important to recognize that the company is not currently profitable, with a negative operating income of $206.1 million over the last twelve months. This aligns with another InvestingPro Tip stating that analysts do not anticipate the company will be profitable this year.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Lemonade, providing a deeper understanding of the company's financial health and market position.
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