Root (NASDAQ:ROOT) Stock Rating Lowered by Zacks Research

Key Points

• Zacks Research downgraded Root from a "hold" to a "strong sell", signaling increased analyst caution on the stock.
• Root reported a strong Q1 earnings beat (EPS $2.09 vs. $0.84 consensus) and completed refinancing that includes a $200M senior secured term loan plus a $75M share repurchase authorization, which management says lowers its cost of capital and reduces financing risk.
• Analyst coverage is mixed (two Buys, four Holds, one Sell) with a MarketBeat consensus rating of "Hold" and a $93.60 target; shares trade near $56.91 with a market cap of roughly $885M and a P/E of about 17.

Root (NASDAQ:ROOT - Get Free Report) was downgraded by research analysts at Zacks Research from a "hold" rating to a "strong sell" rating in a research note issued on Wednesday,Zacks.com reports.

Several other equities analysts have also recently weighed in on the company. Keefe, Bruyette & Woods dropped their price objective on Root from $104.00 to $95.00 and set an "outperform" rating for the company in a report on Tuesday, April 7th. Wall Street Zen raised Root from a "sell" rating to a "hold" rating in a report on Saturday, February 28th. Wells Fargo & Company lifted their price objective on Root from $52.00 to $58.00 and gave the company an "equal weight" rating in a report on Thursday. Weiss Ratings raised Root from a "sell (d+)" rating to a "hold (c)" rating in a report on Thursday, February 26th. Finally, UBS Group dropped their price objective on Root from $90.00 to $52.00 and set a "neutral" rating for the company in a report on Monday, March 9th. Two investment analysts have rated the stock with a Buy rating, four have assigned a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat.com, the company presently has an average rating of "Hold" and a consensus target price of $93.60.

Root Stock Performance

NASDAQ:ROOT opened at $56.91 on Wednesday. The stock has a market cap of $885.52 million, a P/E ratio of 17.04 and a beta of 2.95. The stock has a 50 day simple moving average of $48.95 and a 200 day simple moving average of $64.81. The company has a current ratio of 1.21, a quick ratio of 1.21 and a debt-to-equity ratio of 0.70. Root has a 1-year low of $40.91 and a 1-year high of $162.99.

Root (NASDAQ:ROOT - Get Free Report) last released its quarterly earnings results on Wednesday, May 6th. The company reported $2.09 earnings per share for the quarter, topping the consensus estimate of $0.84 by $1.25. The business had revenue of $393.50 million during the quarter, compared to analysts' expectations of $398.16 million. Root had a return on equity of 21.13% and a net margin of 3.58%.The firm's revenue for the quarter was up 12.5% compared to the same quarter last year. During the same period last year, the firm posted $1.07 EPS. Research analysts anticipate that Root will post 2.15 earnings per share for the current year.

Hedge Funds Weigh In On Root

A number of institutional investors have recently modified their holdings of the business. T. Rowe Price Investment Management Inc. raised its holdings in shares of Root by 8.5% during the 4th quarter. T. Rowe Price Investment Management Inc. now owns 946,632 shares of the company's stock worth $68,376,000 after buying an additional 74,427 shares in the last quarter. Vanguard Group Inc. raised its holdings in shares of Root by 25.9% during the 3rd quarter. Vanguard Group Inc. now owns 724,541 shares of the company's stock worth $64,854,000 after buying an additional 149,064 shares in the last quarter. Capital Research Global Investors raised its holdings in shares of Root by 31.7% during the 4th quarter. Capital Research Global Investors now owns 654,252 shares of the company's stock worth $47,257,000 after buying an additional 157,654 shares in the last quarter. Geode Capital Management LLC raised its holdings in shares of Root by 4.1% during the 4th quarter. Geode Capital Management LLC now owns 310,967 shares of the company's stock worth $22,466,000 after buying an additional 12,238 shares in the last quarter. Finally, State Street Corp raised its holdings in shares of Root by 5.0% during the 4th quarter. State Street Corp now owns 258,168 shares of the company's stock worth $18,647,000 after buying an additional 12,321 shares in the last quarter. Institutional investors and hedge funds own 59.82% of the company's stock.

Root News Summary

Here are the key news stories impacting Root this week:

• Positive Sentiment: Q1 earnings beat — Root reported $2.09 EPS vs. $0.84 consensus and revenue up 12.5% YoY; solid profitability metrics and management commentary support the rally. MarketBeat Q1 Results
• Positive Sentiment: Refinancing and share repurchase — Root announced a refinancing that lowers its cost of capital and a $75 million buyback authorization (and separately secured a $200M senior secured term loan), which reduces financing risk and signals management confidence. GlobeNewswire Release
• Positive Sentiment: New term loan and repurchase authorization coverage — reporting on the $200M senior secured term loan led by Huntington and the board’s repurchase plan reinforces the refinancing story. TipRanks: Term Loan & Repurchase
• Neutral Sentiment: Analyst action — Wells Fargo raised its price target from $52 to $58 but kept an "equal weight" rating (mixed signal: slightly higher valuation but no upgrade to buy). Benzinga: Wells Fargo PT Raise
• Neutral Sentiment: Earnings call transcript available — useful for hearing management’s guidance and margin drivers but not new news by itself. Seeking Alpha Transcript
• Neutral Sentiment: Third‑party comparisons and sector coverage — analyst/compare pieces (e.g., RLI vs. Root) circulated but are background context rather than immediate catalysts. American Banking News Analysis
• Neutral Sentiment: Unrelated cybersecurity headline mentioning "root access" is not connected to Root, Inc.; investors should treat it as noise. MSN: cPanel Vulnerability

Root Company Profile

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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