Morgan Stanley upgraded Lemonade to Overweight from Equalweight and raised its price target to $85 from $80.
The upgrade follows Lemonade’s partnership with Tesla to offer auto insurance. Morgan Stanley said the partnership gives Lemonade first-mover advantage in data analysis and on-the-ground experience.
Lemonade offers a 50% discount on auto insurance when full self-driving is engaged in Tesla vehicles. Morgan Stanley said the company maintains underwriting discipline based on quotes the firm reviewed.
Lemonade shares jumped 11.2% in morning trading.
Morgan Stanley expects Lemonade to expand its autonomous vehicle insurance exposure geographically as the auto market evolves toward autonomy. The firm said this expansion could allow Lemonade to grow its business tenfold, largely through Lemonade Car.
The firm said the scale from this growth should provide the foundation needed to meaningfully improve Lemonade’s long-term earnings profile. The company currently trades at 8.3 times book value with a market cap of $4.41 billion, though InvestingPro analysis suggests the stock may be overvalued at current levels. For deeper insights, investors can access a comprehensive Pro Research Report covering LMND and 1,400+ other US equities.
In other recent news, Lemonade Inc. reported its fourth-quarter 2025 earnings, surpassing analysts’ expectations with a narrower-than-expected loss per share and higher revenue. The company posted an earnings per share of -$0.29, beating the forecasted -$0.39, and revenue reached $228 million, exceeding the forecast of $216.26 million. These results represent a 25.64% surprise in earnings per share and a 5.43% surprise in revenue, highlighting the company’s strong performance. Additionally, Keefe, Bruyette & Woods raised its price target for Lemonade to $44 from $40 while maintaining an Underperform rating. The firm cited stronger premium growth and lower loss ratios, although these were partially offset by higher operating expenses. These developments reflect Lemonade’s capacity to exceed financial projections and adjust its strategic targets.