Key Points
The Morgan Stanley pundit now believes the stock is a buy.
He waxed positive about the company's recent collaboration with a monster EV maker.
An analyst move on Tuesday sweetened investor sentiment toward next-generation insurance company Lemonade(NYSE: LMND), as did developments in the technology that pundit was bullish about. With that, the stock rose by more than 16% over the course of the week, according to data compiled by S&P Global Market Intelligence.
Accelerating momentum
The analyst was Bob Huang of ever-influential investment bank Morgan Stanley. He upgraded his recommendation on Lemonade to overweight (read: buy) from equalweight (hold). He also raised his price target to $85 per share, up from $80.
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According to reports, Huang's new take centers on Lemonade's integration with electric vehicle (EV) incumbent Tesla's onboard vehicle data (if the car's owner provides permission, of course). The insurer is offering a generous 50% discount on insurance for Tesla drivers who engage the full self-driving (FSD) feature in their vehicles.
This positions Lemonade to be something of a first mover in the inevitable explosion of autonomous vehicles, which are already prowling the streets in selected American cities.
Ahead of the pack
Huang's accurate assessment of Lemonade's potential in the burgeoning self-driving space was bolstered by a major development. On Thursday, EV maker Rivian and rideshare king Uber announced a large-scale partnership, under which Uber will invest up to $1.25 billion in Rivian, and the two companies will together launch tens of thousands of self-driving R2 robotaxis.
After a series of fits and starts, the momentum for self-driving technology is clearly accelerating. We can expect greater autonomy on our roads in the coming years, and Lemonade management is to be commended for positioning the company at the forefront of the segment. This will be an exciting stock to watch for sure.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lemonade, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.
