Lemonade's (LMND) recent share price rally has largely priced in the company's growth and earnings outlook, leaving limited room for additional upside without new catalysts, Morgan Stanley said in a Wednesday note.

The brokerage said the insurer's technology-driven growth and underwriting momentum leave it well positioned to achieve net income profitability by the end of 2027, while forecasting gross written premium growth of about 35% in 2026 and 30% in 2027.

Lemonade's ability to compete in a softening auto insurance market while maintaining operating leverage and advancing toward profitability will be key to its long-term growth, the report added.

Morgan Stanley downgraded the stock to equal weight from overweight with a price target of $75.

Lemonade shares were down 9% in Wednesday trading.

Price: 70.56, Change: -7.03, Percent Change: -9.06