What Happened?

Shares of digital insurance provider Lemonade (NYSE: LMND) jumped 4.4% in the afternoon session after an analyst at Morgan Stanley raised the price target on the company's shares, alongside a spike in bullish options activity. Analyst Bob Huang increased the price target for Lemonade to $49.00 from a previous $45.00, representing an 8.89% lift. However, the firm kept its "Underweight" rating on the stock. Separately, the options market showed significant bullish interest. The volume of call options traded was 1.4 times the expected amount, with about 10,373 contracts changing hands. This activity suggested that some traders were betting on a continued rise in the stock's price.

After the initial pop the shares cooled down to $77.57, up 3.5% from previous close.

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What Is The Market Telling Us

Lemonade’s shares are extremely volatile and have had 66 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 5 days ago when the stock gained 22.2% on the news that it posted better-than-expected third-quarter financial results, signaling continued progress toward profitability. The company reported revenue of $194.5 million, up 42.4% from the previous year and surpassing analysts' expectations by 4.8%. More importantly, its loss of $0.51 per share was 27.6% better than what experts had predicted. The strong results were driven by a 46.3% year-over-year increase in Net Premiums Earned, a key measure of core insurance operations. The company also demonstrated improving operational efficiency, with its pre-tax profit margin of negative 18.7% marking a significant 29.5 percentage point improvement compared to the same quarter last year. This combination of strong top-line growth and shrinking losses reassured investors about the company's path forward.

Lemonade is up 113% since the beginning of the year, and at $77.57 per share, it is trading close to its 52-week high of $78.73 from November 2025. Investors who bought $1,000 worth of Lemonade’s shares 5 years ago would now be looking at an investment worth $1,177.

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