Morgan Stanley upgrades insurer Lemonade to 'equal-weight'

Investing.com - Morgan Stanley on Wednesday said it was upgrading insurer Lemonade Inc (NYSE:LMND) to "equal-weight" from "underweight" and raised its price target to $42 from $23.

Shares of Lemonade rose 17.2% at $47, with stock more than doubled in value year to date.

Lemonade at its investor day unveiled plan to grow its business from $1 billion in premiums to $10 billion over the next few years.

The insurance technology company plans to achieve these goals by leveraging advanced technology, improving operational efficiency, and focusing on auto insurance growth. Lemonade's updated guidance also projects a 30% annual growth rate in in-force premiums (IFP), reaching $2 billion by 2027.

Morgan Stanley (NYSE:MS) cited optimism about the company’s profitability timeline, which surpasses market expectations. The bank highlighted Lemonade’s plans for significant expense efficiencies as key to hitting these targets.

For 2025, Lemonade forecasts 50% adjusted gross profit growth, $1.2 billion in IFP, and positive adjusted free cash flow, despite operating in an increasingly competitive auto insurance market.

While Morgan Stanley the most important element of the investor day for it was the goal to achieve net profit exiting 2027, which is significantly better than Wall Street consensus and its expectations.