Root ( NASDAQ: ROOT ) stock edged down 3.8% in Friday premarket trading after Cantor Fitzgerald downgraded shares of the insurtech to Neutral from Overweight as its fourth-quarter results earlier this week made plain that "a return to growth and positive free cash flow [will not be achieved for] more than a year ahead."
During Q4, though, the company's top and bottom lines exceeded Wall Street expectations "by achieving profitable pricing levels in the majority of our markets and reducing our capital consumption by 48%" in response to a tough macroeconomic backdrop, Co-Founder and CEO Alex Timm said during the the latest earnings call .
Furthermore, "we drove a 17 point improvement in gross accident period loss ratio year-over-year in Q4 and we continue to see our loss ratio decline through January," he added.
But its strategy of tightening underwriting and reducing marketing spend "remains a headwind to near-term growth," analyst Josh Siegler wrote in a note to clients, while noting the company's total policies in force fell 17% Y/Y to around 220K.
Seeking Alpha contributor Donovan Jones also viewed Root ( ROOT ) stock as a Neutral, citing a long road ahead toward operating breakeven .
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Root downgraded to Neutral at Cantor as growth and profitability faraway