Root (NASDAQ:ROOT) Shares Gap Down Following Analyst Downgrade

Key Points

• Root shares fell sharply after Keefe, Bruyette & Woods cut its price target from $95 to $80, opening at $47 versus the prior close of $60.28. The firm maintained an outperform rating.
• Analyst sentiment remains mixed, with a consensus “Hold” rating from two Buy and five Hold ratings; the average price target is $82.25.
• Root reported quarterly EPS of $2.09, beating estimates of $0.84, while revenue reached $393.5 million and rose 12.5% year over year. Institutional investors own approximately 59.82% of the company.

Root, Inc. (NASDAQ:ROOT - Get Free Report) gapped down prior to trading on Thursday after Keefe, Bruyette & Woods lowered their price target on the stock from $95.00 to $80.00. The stock had previously closed at $60.28, but opened at $47.00. Keefe, Bruyette & Woods currently has an outperform rating on the stock. Root shares last traded at $46.2450, with a volume of 174,810 shares traded.

A number of other research firms also recently issued reports on ROOT. UBS Group set a $50.00 target price on shares of Root and gave the stock a "neutral" rating in a research report on Monday, May 11th. Weiss Ratings raised shares of Root from a "hold (c-)" rating to a "hold (c)" rating in a research note on Tuesday, July 28th. Wells Fargo & Company increased their price objective on Root from $58.00 to $61.00 and gave the stock an "equal weight" rating in a report on Thursday, July 9th. Zacks Research raised Root from a "strong sell" rating to a "hold" rating in a research report on Monday, June 8th. Finally, TD Cowen restated a "hold" rating on shares of Root in a research note on Wednesday, June 17th. Two research analysts have rated the stock with a Buy rating and five have issued a Hold rating to the company's stock. According to data from MarketBeat.com, the stock presently has a consensus rating of "Hold" and an average price target of $82.25.

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently bought and sold shares of the company. Russell Investments Group Ltd. grew its position in shares of Root by 511.7% in the second quarter. Russell Investments Group Ltd. now owns 734 shares of the company's stock valued at $94,000 after purchasing an additional 614 shares during the last quarter. CoreCap Advisors LLC acquired a new position in shares of Root during the 2nd quarter worth about $42,000. Tower Research Capital LLC TRC lifted its position in shares of Root by 237.2% during the 2nd quarter. Tower Research Capital LLC TRC now owns 1,278 shares of the company's stock worth $164,000 after purchasing an additional 899 shares during the last quarter. Advisory Services Network LLC bought a new stake in Root during the 3rd quarter valued at approximately $144,000. Finally, State of Wyoming acquired a new stake in Root in the 2nd quarter valued at approximately $213,000. Institutional investors and hedge funds own 59.82% of the company's stock.

Root Price Performance

The company has a current ratio of 1.07, a quick ratio of 1.07 and a debt-to-equity ratio of 0.61. The stock has a fifty day simple moving average of $57.11 and a 200-day simple moving average of $55.37. The stock has a market cap of $750.83 million, a price-to-earnings ratio of 13.95 and a beta of 2.89.

Root (NASDAQ:ROOT - Get Free Report) last issued its quarterly earnings results on Wednesday, May 6th. The company reported $2.09 EPS for the quarter, topping analysts' consensus estimates of $0.84 by $1.25. The company had revenue of $393.50 million during the quarter, compared to analyst estimates of $398.16 million. Root had a return on equity of 19.97% and a net margin of 3.58%.The company's quarterly revenue was up 12.5% compared to the same quarter last year. During the same period in the previous year, the company earned $1.07 earnings per share. As a group, equities research analysts expect that Root, Inc. will post 3.28 EPS for the current year.

About Root

Root, trading on the Nasdaq under the ticker ROOT, is a Columbus, Ohio–based insurance company that leverages mobile technology and data analytics to offer personalized auto insurance policies. Founded in 2015 by Alex Timm and Dan Manges, Root set out to transform traditional underwriting by focusing on individual driving behavior rather than broad demographic factors.

The company's core product is usage-based auto insurance, delivered through a smartphone app that monitors driving patterns such as speed, braking and phone usage behind the wheel.

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