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ROOT: West Coast Expansion Will Drive Long-Term Upside Despite Tempered Outlook

Digital Adoption And Telematics Will Redefine Insurance Experiences

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ROOT
AnalystHighTarget
Not Invested
Published 21 Aug 2025

Update shared on 12 Dec 2025

Fair value Decreased 9.09%
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AnalystHighTarget's Fair Value
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1Y
10.9%
7D
3.8%

Analysts lowered their price target on Root from 165 dollars to 150 dollars, citing a tempered outlook for revenue growth and profit margins that more than offset a slightly higher assumed future earnings multiple.

What's in the News

  • Root Insurance expands into Washington, completing its West Coast footprint and now serving drivers in Washington, Oregon, and California (company announcement)
  • The company’s data-driven, smartphone-based pricing model now reaches more than 78% of the U.S. population, significantly broadening its addressable market (company announcement)
  • Washington drivers can enroll via the Root app or joinroot.com, complete a telematics-based test drive, and potentially save up to 1,200 dollars annually based on safe driving behavior (company announcement)
  • Root is deepening distribution by partnering with tech-forward companies and independent insurance agents to offer multiple access points for its digital-first auto policies in Washington (company announcement)

Valuation Changes

  • Fair Value Estimate lowered moderately from 165 dollars to 150 dollars, reflecting a more cautious outlook on the company’s fundamentals.
  • Discount Rate risen slightly from 6.78 percent to 6.96 percent, implying a marginally higher required return and risk assessment.
  • Revenue Growth reduced meaningfully from about 18.95 percent to 14.67 percent, signaling tempered expectations for top line expansion.
  • Net Profit Margin trimmed slightly from approximately 4.14 percent to 3.87 percent, indicating a modestly weaker long term profitability profile.
  • Future P/E increased slightly from about 33.81 times to 34.82 times, suggesting a small upward adjustment in the assumed valuation multiple despite softer fundamentals.

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