Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - Goldman Sachs downgraded Waterdrop Inc (NYSE:WDH) from Buy to Neutral on Monday while raising its price target to $2.00 from $1.80. According to InvestingPro data, the company currently trades at a modest P/E ratio of 10.8 and shows a strong financial health score.
The downgrade follows Waterdrop’s strong year-to-date share price performance, which has risen 64% compared to the S&P 500’s 13% gain and the 42% increase for H-share insurers under Goldman’s coverage.
Goldman Sachs attributes the stock’s outperformance to market expectations of further margin expansion, driven by improving margins in Waterdrop’s insurance segment and cost control initiatives in its non-insurance operations.
The firm notes that Waterdrop began increasing customer acquisition through third-party traffic channels starting in the second quarter of 2025, but revenue growth has remained muted since 2022.
Goldman Sachs identifies two key risks for Waterdrop: potential further decline in take-rates as third-party traffic channel mix increases, and a structural change in product mix that could lead to permanently lower take-rates.
In other recent news, Waterdrop Inc. reported significant growth in both revenue and net profit for the second quarter of 2025. The company emphasized its integration of artificial intelligence across operations, which has enhanced efficiency and productivity. This development was well-received by investors, as evidenced by the positive response in premarket trading. The earnings call highlighted Waterdrop’s robust performance, marking a strong year-over-year improvement. Analysts and investors are closely watching these advancements as the company continues to implement AI-driven strategies. Waterdrop’s latest financial results underscore its ongoing momentum in the market. These updates reflect the company’s commitment to leveraging technology for business growth.
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