Lemonade, Inc. (NYSE:LMND) Analysts Are Pretty Bullish On The Stock After Recent Results
There's been a major selloff in Lemonade, Inc. (NYSE:LMND) shares in the week since it released its annual report, with the stock down 20% to US$103. The results look positive overall; while revenues of US$94m were in line with analyst predictions, statutory losses were 3.8% smaller than expected, with Lemonade losing US$3.63 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Lemonade
Taking into account the latest results, the current consensus from Lemonade's five analysts is for revenues of US$113.1m in 2021, which would reflect a meaningful 20% increase on its sales over the past 12 months. Losses are supposed to decline, shrinking 13% from last year to US$3.17. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$112.0m and losses of US$2.98 per share in 2021. So it's pretty clear consensus is mixed on Lemonade after the new consensus numbers; while the analysts held their revenue numbers steady, they also administered a pronounced increase to per-share loss expectations.
Although the analysts are now forecasting higher losses, the average price target rose 24% to US$86.17, which could indicate that these losses are expected to be "one-off", or are not anticipated to have a longer-term impact on the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Lemonade analyst has a price target of US$159 per share, while the most pessimistic values it at US$56.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Lemonade's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 20% growth on an annualised basis. This is compared to a historical growth rate of 63% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.2% annually. Even after the forecast slowdown in growth, it seems obvious that Lemonade is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Lemonade going out to 2023, and you can see them free on our platform here..
You still need to take note of risks, for example - Lemonade has 4 warning signs (and 1 which shouldn't be ignored) we think you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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