Lemonade (LMND) faces challenges to its growth ambitions amid concerns about tariffs, rising competition, and broader macroeconomic uncertainty, Morgan Stanley said in a report Tuesday.

The brokerage expressed doubt about Lemonade's ability to achieve its target of growing the business tenfold, especially as the company pushes further into the highly competitive auto insurance market.

"We believe the current market conditions around tariffs, intensified competition from incumbents, and macro uncertainties will make Lemonade's initiatives to 10x the business more difficult," Morgan Stanley said.

While Lemonade has made progress toward profitability, Morgan Stanley noted it remains several years away from achieving GAAP net income. In the current environment, the stock is expected to underperform peers with stronger earnings and cash flow profiles.

Morgan Stanley downgraded the stock to underweight from equal-weight, and lowered its price target to $24 from $35, citing weaker earnings power and increased macro risk.

Shares of Lemonade were down nearly 3% in recent Tuesday trading.

Price: 27.34, Change: -0.77, Percent Change: -2.74