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Lemonade Drops Following Earnings; Analysts Mixed on Outlook

Lemonade's loss missed estimates as the insurer saw a year's worth of claims in just the first few days of this year's Texas ice storm.
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Shares of Lemonade (LMND) - Get Lemonade Inc. Report dropped on Wednesday after the insurance carrier reported a first-quarter loss that missed the consensus estimate. 

The New York company reported a first quarter net loss of 81 cents a share on net premiums earned of $13.8 million. Analysts were expecting a loss of 78 cents a share with net earned premiums of $13.6 million. 

Just the first few days of the severe winter storm that hammered Texas in February resulted in a year's worth of claims, Lemonade said in a letter to shareholders. 

Shares of Lemonade at last check dropped 14% to $63.38. 

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Analysts at Morgan Stanley maintained an equal weight rating and $90 price target on the company. 

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"There is no launch date yet for Lemonade Car, but the guidance provided does not include any material contribution from this new product," analyst Michael Phillips said.

"As we highlighted in our joint note with our autos analyst, we believe the venture into the auto market should provide for a successful growth strategy, but foresee a range of issues to be dealt with (i.e., capital expenditure, possible higher loss and expense ratios, regulation)."

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On a more bullish note, analysts at JMP Securities reiterated a market outperform rating and $130 price target. 

"Lemonade offered a retention metric that suggests its ability to bundle and continued progress with customer graduations are improving duration and spend with Lemonade," analyst Ronald Josey said. 

"With auto insurance likely to be launched in 2021, we believe bundling and graduation rates can continue to improve as it leverages its [artificial-intelligence]-led tech infrastructure and growing customer base."