JMP Securities Starts Root, Inc. (ROOT) at Market Outperform
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JMP Securities analyst Matthew Carletti initiates coverage on Root, Inc. (NASDAQ: ROOT) with a Market Outperform rating and a price target of $30.00.
The analyst commented, "We believe that Root’s business model of pricing its entire book based on actual driving behavior (telematics) rather than surrogates (such as gender, age, credit score, etc.) will allow it to better assess risk over the long run, and ultimately allow the company to gain market share at attractive loss ratios. Although Root now has data on 10B miles, 500M trips, and 200K claims, and its algorithm is now 10x more predictive in just four years, it remains very early days in the evolution of Root. As such, we believe that loss ratio improvements are not done - a key leap of faith that we think all investors in Root must make, alongside improvements in churn - and that once at scale, its expense ratio will fall to industry-leading levels that result in attractive overall margins."
Shares of Root, Inc. closed at $19.10 yesterday.
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