By Senad Karaahmetovic
Piper Sandler analyst Arvind Ramnani downgraded shares of Lemonade (NYSE:LMND) and Udemy (NASDAQ:UDMY) to Neutral from Overweight ahead of the Q2 earnings season.
The analyst sees these stocks trading under pressure in the next 6-18 months amid persisting macro headwinds. The price target for Lemonade is cut to $20 from $24.
“The prolonged timeline to profitability and the MILE integration risk continue weigh on the stock. The company’s substantial investments behind customer acquisition (S&M at ~110% of 2021 revenue), technology (40%), and G&A (57%), have pressured profitability. We expect high net loss ratios (~93%) to persist which may drive the company to pull back on investments to build out its product portfolio, pressuring outyear growth,” Ramnani told clients in a note.
Similarly, Udemy price target is slashed to $11 from $11 while the downgrade call is based on “steepening risk factors embedded in its Consumer business and possible delays in Business bookings attributable to macro uncertainty”.
“While FY22 could be in-line, we think consensus FY23 estimates are at risk. We note that consensus revenue growth is +22.8% in FY23, thereby assuming revenue growth acceleration from FY22 of +20.6%,” Ramnani added.
The analyst also slashed Aeva Technologies (NYSE:AEVA) to Neutral from Overweight with a $3 per share price target (down from $5).