Morgan Stanley started shares of Lemonade (NYSE:LMND) at Underweight with a $14 price target in a note Tuesday.
Lemonade shares have tumbled over 11% so far in the session, but the stock is up 23.5% so far this year.
Analysts told investors that Lemonade's recent share price move does not reflect the long-term path to profitability.
"Lemonade stock rose ~47% YTD on the back of strong 1Q23 results, but the company's path to profitability remains long," analysts wrote. "Since the IPO, Lemonade has experienced strong earned premium growth by utilizing its differentiated and technology-focused business model. In our view, this approach carries execution risk."
Morgan Stanley does not expect LMND to turn adjusted EBITDA positive until 2027e.
"Given strong share price performance YTD (stock is up ~47% in 2023), and trading at ~3x EV/revenue, we feel that longer-term challenges facing the company are not fully reflected in the share price," added analysts, who stated that their firm sees better risk/reward elsewhere.