Lemonade Inc. (LMND) Not Likely to See Positive Cash Flow Until 2028 - BofA Securities

May 3, 2021 7:41 AM EDT
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Price: $79.11 +3.91%

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BofA Securities analyst Joshua Shanker raised the price target on Lemonade Inc. (NYSE: LMND) to $29.00 (from $25.00) after adding Insurance to the model. However, BofA maintained an Underperform rating on the belief that adding this business pushed the window for positive Cash Flow into 2028.

The analyst stated "we estimated that Lemonade would turn cash flow positive in late 2025. However, the inclusion of auto at a higher loss ratio than renters’ and with higher marketing costs means a less clear path to profitability. Selling renters’/auto bundles at a discount directly is a core competency at Allstate, GEICO and Progressive among others, and the auto/renters’ market entails (higher) customer acquisition costs similar to peers. Even though the business will be less profitable, our Price Objective rises to $29 (from $25) as we value Lemonade at 2x premium revenue, which is higher as we include auto."

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