Lemonade (LMND) Gains Ater Better Than Feared Results, Analysts Remain Cagey

August 9, 2022 8:35 AM EDT
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Price: $22.82 -1.13%

Rating Summary:
    2 Buy, 4 Hold, 5 Sell

Rating Trend: Up Up

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    Up: 15 | Down: 30 | New: 23
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Shares of Lemonade (NYSE: LMND) are up more than 10% in premarket trading Tuesday after the company reported better-than-expected Q2 results and issued an upbeat FY revenue forecast.

The insurance provider reported a Q2 loss per share of $1.10, compared to a loss per share of 90c in the year-ago period, while analysts were expecting a loss per share of $1.32. Lemonade generated $50 million in revenue, up 77% YoY and above the analyst consensus of $47.8 million.

The company reported 1.58 million customers in the quarter, just below the expected 1.6 million. Adjusted EBITDA loss stood at $50.3 million in the period, up 25% YoY and below the expected loss of $66.4 million.

For Q3, LMND expects revenue in the range of $63 million to $65 million, while analysts were looking for $70.7 million. The insurance company expects Q3 adjusted EBITDA loss to range between $69 million to $74 million, compared to analyst estimates of $83.4 million.

For the full fiscal year, Lemonade estimates revenue in the range of $236 million to $239 million, topping the consensus estimates of $213.7 million. Adjusted EBITDA loss for the full year is expected to be between $240 million and $245 million, compared to the expectations of $282.3 million.

In a shareholder letter, the company said it continues to see "strong demand" despite strong macro headwinds.

Berenberg analyst Michael Huttner noted the management commentary provided the “light at the end of the tunnel” for the retail property and casualty insurance business.

Bank of America analyst Joshua Shanker added:

“Given Lemonade’s policy growth despite materially reduced marketing spend suggests underpricing alone can attract new customers. Material downside to our price objective provides the basis for our Underperform recommendation.”

By Senad Karaahmetovic

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