Wells Fargo has revised its price target for Root (ROOT, Financial), lowering it from $142 to $118 while maintaining an Equal Weight stance on the stock as it approaches its quarterly earnings announcement. The firm highlights that attention should be directed towards pricing, loss trends, and reserves for property and casualty companies, while focusing on organic growth and margins for brokers. Additionally, sales, VII, and capital considerations are crucial for life insurance companies during this period.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Root Inc (ROOT, Financial) is $149.80 with a high estimate of $172.00 and a low estimate of $125.00. The average target implies an upside of 21.18% from the current price of $123.62. More detailed estimate data can be found on the Root Inc (ROOT) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, Root Inc's (ROOT, Financial) average brokerage recommendation is currently 2.5, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Root Inc (ROOT, Financial) in one year is $49.35, suggesting a downside of 60.08% from the current price of $123.62. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Root Inc (ROOT) Summary page.
ROOT Key Business Developments
Release Date: May 07, 2025
- Net Income: $18 million, a $25 million improvement year-over-year.
- Operating Income: $24 million, an $18 million improvement year-over-year.
- Adjusted EBITDA: $32 million, a $17 million improvement year-over-year.
- Gross Premiums Written: Increased by 24% from the first quarter of 2024.
- Gross Accident Period Loss Ratio: 58% for the first quarter.
- Net Combined Ratio: 96%, a 6 point improvement year-over-year.
- Unencumbered Capital: $347 million at the end of the period.
- Interest Expense Savings: Reduced interest rate by 25 basis points due to amended debt facility with BlackRock.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Root Inc (ROOT, Financial) reported a profitable quarter with a net income of $18 million, operating income of $24 million, and adjusted EBITDA of $32 million.
- Gross premiums written increased by 24% compared to the first quarter of 2024.
- The company achieved a strong gross accident period loss ratio of 58%, enabled by investments in data science and technology.
- Root Inc (ROOT) expanded its partnership channel, launching new strategic partnerships with Hyundai Capital America and Experian.
- The company is in a strong capital position with $347 million in unencumbered capital, allowing for flexible deployment of growth capital.
Negative Points
- The seasonal favorability seen in the first quarter, driven by tax refunds and lower miles driven, is not expected to persist throughout the rest of 2025.
- Root Inc (ROOT) anticipates higher loss ratios in Q2 and Q3 due to seasonal factors like convective storms and hurricane season.
- The company faces potential impacts from tariffs, which could lead to a low- to mid-single-digit increase in loss ratios.
- There is a higher churn associated with increased growth in early-stage cohorts, particularly in the direct channel.
- Root Inc (ROOT) acknowledges that its approach to running the business on a lifetime unit economic framework may impact GAAP profitability in any given quarter.
