Analysts Sour on Lemonade Shares After Run-Up

Lemonade stock has more than doubled from its July 2 IPO price of $29.
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Lemonade  (LMND)  shares fell Monday, after some analysts began coverage of the online insurance company with a lack of enthusiasm.

Valuation is a concern. The stock has more than doubled from its July 2 IPO price of $29. Lemonade shares recently traded at $71.90, down 7.79%.

Goldman Sachs, the lead underwriter of the IPO, rates Lemonade as a sell, with a price target of $44. That’s the lowest on Wall Street, according to Bloomberg.

With its use of artificial intelligence, Lemonade is disrupting the property & casualty insurance business, Goldman analysts wrote in a report cited by MarketWatch.

But "with 140% year-over-year gross earned premium growth in the most recent quarter, about five years of expected operating losses before reaching break-even, and significant capital needs beyond the most recent IPO, LMND is essentially venture investing in the public markets," they said.

To be sure, analysts did have some positive comments about Lemonade.

William Blair analyst Ralph Schackart has a market perform rating on the stock.

Lemonade’s digital platform is “compelling,” he wrote in a commentary cited by Bloomberg.

Lemonade can shoot out a quote for renter’s insurance quote in less than two minutes.

JMP analyst Ronald Josey was the sole bull of the bunch, with an outperform rating and a share-target price of $105, the highest on Wall Street, according to Bloomberg.

He wrote in a commentary that 90% of Lemonade customers represent first-time buyers of insurance and 70% under 35, Blomberg reports.

“Lemonade is not fighting for a piece of the pie, but rather it is attaining customers before they would otherwise become part of the pie.”