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Lemonade stands to benefit from its improving positioning in autonomous auto insurance, according to Morgan Stanley. The bank upgraded the insurance stock to overweight from equal weight. Analyst Bob Jian Huang’s new price target of $85, up from $80, corresponds to a rally ahead of 47% from Monday’s close. Huang wrote that autonomous driving vehicles will likely reshape how auto insurance is underwritten over time. As autonomous vehicles reset some insurers’ competitive advantages, Jiang believes that new winners, such as Lemonade, will likely emerge in the industry. He wrote that he has grown more positive about Lemonade’s competitive positioning. The move comes after Lemonade announced its after he analyst pointed to Lemonade’s Autonomous Car insurance partnership with Tesla . The deal offers Tesla owners 50% off every mile driven using Full Self-Driving technology and does not sacrifice underwriting discipline. “Lemonade’s Tesla partnership represents an important first step and gives Lemonade first-mover advantage in data analysis and on-the-ground experience. While Lemonade is offering a 50% discount on auto insurance when full self-driving (FSD) is engaged in Tesla vehicles, the company is maintaining underwriting discipline based on the quotes we viewed,” the analyst wrote. He added: “As the auto market continues to evolve toward autonomous, we expect Lemonade to expand its autonomous exposure geographically, putting it on the path to 10x its business, largely via Lemonade Car. This should provide the scale needed to meaningfully improve its long-term earnings profile.” Share of Lemonade have plunged 19% this year. Over the past 12 months, they have surged 56%.
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