Lemonade Surges on Autonomous Auto Insurance

Morgan Stanley analysts have upgraded Lemonade's stock to an 'overweight' rating, citing the company's growing strength in the autonomous auto insurance sector. The bank's new price target of $85 per share suggests a potential 47% increase from its recent closing price. This optimistic outlook stems from the anticipated shift in auto insurance underwriting due to autonomous driving technology. As vehicles become more autonomous, new industry leaders like Lemonade are expected to emerge. Lemonade's recent partnership with Tesla for its Autonomous Car insurance product has been a significant catalyst. This deal provides Tesla owners with a 50% discount on mileage accumulated while using Full Self-Driving features, without compromising underwriting standards. This collaboration is seen as a crucial first step, granting Lemonade an advantage in data analysis and practical experience in this emerging field. Despite the discount offered, the company maintains its disciplined underwriting approach. Analysts predict Lemonade will expand its autonomous insurance offerings geographically, potentially multiplying its business tenfold through Lemonade Car. This expansion is expected to enhance its long-term earnings potential by achieving necessary scale. Despite a 19% decline year-to-date, Lemonade's shares have seen a substantial 56% increase over the past twelve months.