Morgan Stanley bullish on Waterdrop Inc on better fundamentals, regulatory environment

Waterdrop

16/09/2022 15:55

** Morgan Stanley lifts rating on Tencent-backed online
health insurance platform Waterdrop Inc  WDH.N  to "overweight"
from "equal-weight" on improving fundamentals and regulatory
environment
    ** Waterdrop's U.S.-listed shares up ~3% at $1.21
    ** Brokerage says WDH's turnaround is gaining traction,
highlighting an 8% sequential increase in Q2 revenue and
company's moves to cut costs
    ** MS expects WDH's revenue to regain growth starting in Q4
after suffering a hit to insurance commission revenue due to
regulatory tightening
    ** Brokerage adds WDH's profitability has improved
substantially, noting selling and operating costs fell to 55% of
revenue in Q2
    ** While concerns over de-listing took a heavy toll on
stock, the depressed level is not pricing in any future profit
despite company's improving margin and cash generation
capability - brokerage
    ** Stock is rated "buy" or higher by 5 brokerages; median PT
$2.30 - Refinitiv
    ** YTD, company's U.S.-listed shares down ~14%

 (Reporting by Deborah Sophia in Bengaluru)
 ((DeborahMary.Sophia@thomsonreuters.com))