Why Root Stock Zoomed Almost 26% Higher This Week

One of the better-performing financial stocks over the past few days hasn't been a famous bank or a prominent credit card company. Booking a share price gain of nearly 26% over the course of this week, according to data compiled by S&P Global Market Intelligence, was insurance company Root (NASDAQ: ROOT). A significant analyst price target raise was a key reason for this.

Potential to motor well higher

On Tuesday, Keefe, Bruyette & Woods' Tommy McJoynt lifted his fair value assessment for Root to $150 per share while maintaining his outperform (read: buy) recommendation on the stock. That was quite some distance higher than McJoynt's previous price target of $90.

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The analyst's adjustment came in advance of Root's first-quarter earnings release, slated for release on Wednesday, May 7. According to reports, McJoynt considers the stock to be a top pick in the insurance tech space, as he feels it could well exceed the consensus analyst estimates for 2025 to 2027.

Additionally, the prognosticator waxed bullish about the company's potential to grow its policies-in-force numbers. He mentioned partnerships with auto industry players such as sprawling retailer Carvana as sources of this growth.

Leaving estimates in the dust

We shouldn't be surprised if Root indeed blasts past pundit estimates in that first quarter; after all, it's habitually done so in the recent past. In fact, it posted a surprise net profit in 2024. This is an underappreciated and rather obscure stock currently overshadowed by a clutch of insurance incumbents. Given these factors, it's well worth considering as a buy.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.