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Investing.com - Keefe, Bruyette & Woods lowered its price target on Root, Inc. (NASDAQ:ROOT) to $165.00 from $170.00 on Friday, while maintaining an Outperform rating on the insurance technology company.
The firm cited Root’s second-quarter 2025 results, which showed a strong bottom-line performance that exceeded expectations, despite slightly missing targets for premium and policy-in-force growth. The company’s financial health remains solid, with a healthy current ratio of 2.48 and impressive revenue growth of 59.76% over the last twelve months.
Keefe, Bruyette & Woods trimmed its forward estimates for Root, primarily due to higher projected expenses related to Carvana (NYSE:CVNA) warrants (including a large portion to be expensed in the third quarter of 2025), increased stock-based compensation, and research and development investments.
The firm’s revised financial model assumes Root will achieve policy-in-force growth of 12-14% annually, which contributed to the reduction in the price target based on discounted cash flow analysis.
Despite the lower price target, Keefe, Bruyette & Woods maintained its Outperform rating, citing potential upside to consensus earnings estimates, Root’s channel diversification (currently 56% direct and 44% partnership), and the company’s agility due to its size and technology, which positions it well amid tariff uncertainty.
In other recent news, Root Inc . reported its Q2 2025 earnings, exceeding analyst expectations with an impressive earnings per share of $1.29, compared to the forecasted $0.52. This represents a notable surprise of 148.08%. The company’s revenue also surpassed projections, reaching $382.9 million against the anticipated $354.35 million. Despite these strong financial results, Root’s stock experienced a decline in aftermarket trading as investors considered the company’s future guidance and strategic investments. The significant earnings beat highlights Root’s financial performance in the recent quarter. Analysts and investors will likely be closely monitoring the company’s strategic decisions moving forward. These recent developments reflect Root’s current financial standing and market position.
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