Lemonade Stock Faces Wall Street Caution As Core Profit Growth Comes Into Focus

Lemonade’s stock has declined over the last few days due to its core profit growth target being, in hindsight, missed, even as the company delivers on revenue.

• Piper Sandler lowered the firm's price target on Lemonade to $65 from $85 and maintained a ‘Neutral’ rating, according to The Fly.
• Lemonade forecast its adjusted EBITDA for 2026 to be in the range of $48 million to $52 million.
• Lemonade has been using Blender, its AI-powered insurance operating system, to help claim adjusters handle three times the claim volume they could before.

Shares of Lemonade fell more than 1% in overnight trading heading into Monday, on track for a potential third day of declines, as Wall Street analysts grow cautious about core profit growth for the year, even as the company reported better-than-expected fourth-quarter results.

Piper Sandler lowered the firm's price target on Lemonade to $65 from $85 and maintained a ‘Neutral’ rating, according to The Fly. The new price target implies a 13.4% upside to the last closing price of $57.31.

Wall Street analysts on average have a ‘Hold’ rating, according to Koyfin, with three out of 11 analysts rating the stock ‘Buy’ or higher, five ‘Hold’, and three rating it ‘Sell’ or lower. The average price target is $65.11 on Wall Street and implies a nearly 14% upside to Friday’s closing price.

Piper Sandler’s Core Profit Worry

The firm noted that the stock has consistently traded down because the company has not moved forward with its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) profitability target, despite better underwriting and commentary on initiatives to drive bunding, pricing, and automation.

Lemonade forecast its 2026 adjusted EBITDA to be in the range of $48 million to $52 million. Piper believes investors think the company's initiatives to drive prices and automation would “prove costly.”

The firm noted that these concerns are "overly simplistic," given that Lemonade is arguably doing better in the direct-to-consumer personal lines insurance.

Lemonade’s AI-Based Growth

Lemonade has been using Blender, its AI-powered insurance operating system, to help claim adjusters handle three times the claim volume they could before. Last year, the company noted that AI deployments are now reflected on “pretty much every line” of Lemonade’s profit and loss statement, and that marketing spend has more than tripled, driven by AI-powered improvements in segmentation and pricing.

How Are Stocktwits Users’ Reacting?

Retail sentiment on Lemonade jumped to ‘extremely bullish’ from ‘neutral’ a week ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits.

A user on Stocktwits noted that “profitability remains” as the key challenge for Lemonade.

Shares of Lemonade have gained nearly 63% in the last 12 months.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<