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Investing.com - BMO Capital has raised its price target on Lemonade Inc . (NYSE:LMND) to $23.00 from $15.00 while maintaining an Underperform rating on the stock. Currently trading at $45.03, the stock has shown remarkable momentum with a 166% return over the past year. According to InvestingPro data, analyst targets for LMND range from $15 to $60.
The price target increase follows Lemonade’s announcement that it will retain approximately 80% of its gross premiums going forward, a significant increase from its previous retention level of approximately 45%.
BMO Capital noted that this increase in premium retention is occurring sooner than it had originally modeled in its projections for the insurance technology company.
The research firm indicated it had already expected Lemonade’s retention ratio to continue increasing over time, with an ultimate projection of approximately 95% retention as the company’s economics improve.
BMO Capital’s long-term model still anticipates Lemonade reaching the 95% premium retention level by 2030, suggesting a gradual progression toward the company retaining more of its underwriting business over the next several years.
In other recent news, Lemonade Inc. reported strong financial results for the first quarter of 2025, surpassing expectations with a revenue of $151.2 million, which exceeded the forecast of $145.92 million. The company also reported an earnings per share (EPS) of -$0.86, beating the anticipated -$0.92. Lemonade’s adjusted gross profit reached $46 million, outperforming both JMP’s estimate of $41 million and the consensus of $37 million. The company has also announced a significant reduction in its reinsurance quota share from 55% to 20%, citing improvements in diversification and underwriting capabilities as key factors for this change. Keefe, Bruyette & Woods raised their price target for Lemonade to $26 from $22, while maintaining an Underperform rating, expressing concerns over potential challenges in capital capacity and growth targets. JMP analysts maintained a Market Outperform rating with a $60 price target, highlighting Lemonade’s successful expansion in auto insurance and the company’s use of telematics. Lemonade’s in-force premium (IFP) growth has accelerated for six consecutive quarters, with projections indicating further growth in the coming years.
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