What Happened?
Shares of digital insurance provider Lemonade (NYSE: LMND) jumped 4.8% in the afternoon session after JMP analyst Matthew Carletti raised the price target for the company, projecting a significant market share increase and sustainable growth. This optimistic outlook from the analyst helped propel the stock to a new 52-week high. Morgan Stanley also adjusted its target for Lemonade, though it maintained a more cautious view.
The shares closed the day at $82.39, up 5.1% from previous close.
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What Is The Market Telling Us
Lemonade’s shares are extremely volatile and have had 60 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 4.9% on the news that analyst price targets suggested a significant potential downside for the stock. The stock's decline appeared linked to broader analyst sentiment. Reports covering Wall Street analysts indicated a consensus "Hold" rating on the stock. Furthermore, the average price target was around $48.25, which pointed to a potential downside of nearly 39% from its recent trading levels. This notable gap between the current stock price and analyst forecasts likely raised concerns among investors about the company's valuation.
Lemonade is up 127% since the beginning of the year, and at $82.55 per share, has set a new 52-week high. Investors who bought $1,000 worth of Lemonade’s shares 5 years ago would now be looking at an investment worth $901.30.
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