Strength Seen in Lemonade (LMND): Can Its 13.1% Jump Turn into More Strength?

Lemonade (LMND) shares ended the last trading session 13.1% higher at $96.57. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 7% gain over the past four weeks.

The shares likely have gained as Lemonade launched its new Lemonade Autonomous Car insurance business. Lemonade will collaborate with Tesla, giving drivers using FSD a 50% lower per-mile rate. This deal is a strategic fit into Lemonade's AI-powered insurance operations.

The partnership is a bet that these lower accident rates will not only boost profits up front, but also likely improve profitability over time as Tesla updates its technology. The deal gives Lemonade instant access to Tesla's massive customer base.

This company is expected to post quarterly loss of $0.41 per share in its upcoming report, which represents a year-over-year change of +2.4%. Revenues are expected to be $216.67 million, up 45.6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Lemonade, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on LMND going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Lemonade is part of the Zacks Insurance - Multi line industry. International General Insurance Holdings Ltd. (IGIC), another stock in the same industry, closed the last trading session 2.2% higher at $24.59. IGIC has returned -5.4% in the past month.

International General Insurance's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.83. Compared to the company's year-ago EPS, this represents a change of -6.7%. International General Insurance currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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