High-tech insurer Lemonade (NYSE: LMND) continues leading the industry into the future. And, analysts are taking notice. Morgan Stanley upgraded Lemonade stock on Tuesday for its future-minded efforts, in fact, citing its new partnership with electric vehicle manufacturer Tesla (NASDAQ: TSLA) meant to address a problem that a growing number of newer car owners face. That is, how to insure self-driving automobiles. Morgan Stanley believes Lemonade's getting a handle on the nascent business, giving it a first-mover advantage.

It's not a new offering, to be clear. Lemonade unveiled its autonomous car insurance product back in January, offering roughly a 50% discount to Tesla owners for the miles handled by the EV company's onboard FSD (full self-driving) technology. This pricing model implies fewer accidents occur when FSD is steering the car rather than when human hands are on the wheel. The news went relatively unnoticed though.

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The news didn't go unnoticed by Morgan Stanley analyst Bob Huang, however. Having had a couple of months to think about it, on Tuesday, Huang upgraded the firm's stance on LMND stock from equal-weight to overweight, while simultaneously raising its price target from $80.00 to $85.00 per share. He explains that this partnership -- which includes providing Lemonade with access to Tesla's self-driving data -- not only serves as the first step toward a new kind of auto insurance, but puts Lemonade in the lead of this paradigm shift. The market responded, sending LMND shares up 15.5% as of 12:15 p.m. ET Tuesday.

While Lemonade may be the first insurer to create a product specifically for autonomously driven vehicles and the unique way they're capable of operating (which calls into question who should be held responsible for accidents), it certainly won't be the last. Competitors will eventually follow.

Morgan Stanley's Huang is right, though, in highlighting how being first to market gives Lemonade a significant strategic advantage. It also helps that the insurer has already embraced the use of technology -- including artificial intelligence -- in many facets of its business including claims, which can be complicated as well as time-consuming. It's well-equipped to do something constructive with the digital data it will receive from Tesla, or any other automobile manufacturers or self-driving technology developers it works with in the future.

This news in and of itself isn't a reason to buy LMND stock today, however, if you weren't already bullish on the company. That being said, Lemonade was and still is a compelling prospect even without today's upgrade.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lemonade and Tesla. The Motley Fool has a disclosure policy.

Why Lemonade Stock Is Up More Than 15% on Tuesday was originally published by The Motley Fool