Morgan Stanley recently released a research report that gave WDH.US an "overweight" rating, pointing to continued revenue growth to gain scale and expansion into health care as a moat for Waterdrop, with a target price of $11.80, six times the price of 2021.

Morgan Stanley believes that given Shuidi's rapid commission revenue growth, its share price is currently only 2.7 times that of 2022 Pamp S, which is attractive relative to its performance growth of about 50%. Morgan Stanley rates Shuidi as "overweight" because it is a participant in a mature but fast-growing market segment, which is expected to be profitable by 2023 and is bullish on its potential for a rapid turnaround. At the same time, it believes that Shuidi is in a good position to enter health care services.

Morgan Stanley gave Shuidi 6 times the Pmax S multiple in 2021, with a target multiple between insurance technology companies (3 times) and health care platform (11 times). The compound annual growth rate of revenue from 2021-23 is 56%, which exceeds the average growth rate of 20% for insurance technology companies. Morgan Stanley also expects Shuidi's net profit margin to rise to 7% by 2023 and 15-20% in the long run.

A key feature that distinguishes Waterdrop from its peers is its serious illness fund-raising business, which is not only a low-cost flow portal for insurance sales, but also gives it access to a large number of seriously ill patients, which is a key basis for its expansion into health services such as referrals / drug benefit management (PBM), Morgan Stanley said in the research paper. "over time, these new initiatives can help the company differentiate its health insurance products if they include exclusive health care services that are competitively priced. "

Daimo believes that Shuidi's digital operation model brings higher efficiency, selling short-term medical insurance directly through online marketing, while switching to long-term insurance through online services, which is 10 times more productive than traditional offline agents. at the same time, the cost of getting customers is much lower than offline. Morgan Stanley also believes that Shuidi will develop more of its own channels and natural flow, and reduce its dependence on third-party traffic, which is expected to reduce its contribution to revenue from 37% in 2020 to 29% in 2023.

Given that Shuidi has a large customer base and provides a lot of money for China's health care system, Daimo believes that Shuidi can add more products and services to enhance the long-term value of its customers, especially in the field of health care.

According to Frost & Sullivan's estimates, the scale of various online medical services will reach 855 billion yuan by 2025.

In November 20, Shuidi launched a droplet health program, which provides online health analysis, expert appointment and online consultation. At the same time, it carries out pilot projects in the areas of clinical patient recruitment and drug welfare management (PBM). There is a lot of synergy between Daimo and Shuidi's customer base.

Goldman Sachs recently reported that droplets will grow by 45% over the next three years, rising to $11, while Citic Lyon sees droplets rising to $15.8. BofA also rates droplets buy, with a target price of $11.50.

Over the past five trading days, Shuidi's shares have risen from $7.365 to close at $8.46, or 15%, to as high as $8.75.