What Happened?
Shares of digital insurance provider Lemonade (NYSE: LMND) jumped 4.8% in the afternoon session after BMO Capital significantly raised its price target on the stock. The move was primarily driven by BMO Capital, which nearly doubled its price target on the stock to $42.00 from $23.00. BMO noted that Lemonade's growth may require less capital than its peers due to its rating agency situation, which provides the company with greater financial flexibility. Despite the significant target increase, BMO maintained its "Underperform" rating, cautioning that the current stock price seems to reflect a "best-case scenario."
After the initial pop the shares cooled down to $59.64, up 4% from previous close.
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What Is The Market Telling Us
Lemonade’s shares are extremely volatile and have had 63 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 13 days ago when the stock gained 28.2% on the news that the company posted strong second-quarter financial results that beat Wall Street estimates and raised its full-year outlook. The AI-powered insurer posted revenue of $164.1 million and a loss of $0.60 per share, both of which topped analyst estimates. Company management attributed the strong performance to accelerating growth and healthy underwriting. Furthermore, Lemonade lifted its full-year 2025 revenue forecast to between $710 million and $716 million. The company also reported that its in-force premium, a key metric representing the value of all active policies, climbed 29% from the previous year to $1.08 billion, a sign of robust customer expansion.
Lemonade is up 63.9% since the beginning of the year, and at $59.64 per share, it is trading close to its 52-week high of $59.70 from August 2025. Investors who bought $1,000 worth of Lemonade’s shares 5 years ago would now be looking at an investment worth $965.26.
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