Dahua Jixian: Reiterates Waterdrop Inc. (WDH.US) Buy Rating and Raises Target Price to $2.95

After Waterdrop Inc. (WDH.US) released its Q4 2025 and full-year results, Dahua Jixian recently issued a research report stating that Waterdrop’s Q4 2025 performance beat expectations, with year-over-year growth of over 60% in net profit attributable to shareholders. Based on the company’s strong performance, Dahua Jixian raised its revenue and net profit forecasts for Waterdrop in 2026, reiterated a “Buy” rating, and raised its target price from $2.91 to $2.95.

The research report analysis said that Waterdrop’s performance was 21% higher than Dahua Jixian’s prior expectations. The outperformance was mainly driven by the rapid growth of the insurance business under AI.

In Q4 2025, Waterdrop’s net operating revenue was RMB 1.411 billion, and net profit attributable to shareholders was RMB 162 million, up 62.7% year over year, achieving profitability for 16 consecutive quarters. Looking at the full year of 2025, net operating revenue was RMB 3.978 billion, up 43.5%; net profit attributable to shareholders was RMB 569 million, up 54.8%. Of this, full-year insurance business revenue reached RMB 3.577 billion, up 51.3%.

Waterdrop adheres to the strategic direction of “technology-driven growth,” continuously deepening its AI technology system and accelerating its evolution toward an AI-native company. As of the end of December 2025, the company had applied for 72 patents related to large models. With the help of AI large models, Waterdrop’s ability to serve insurance vertical scenarios has been significantly enhanced. AI medical insurance expert assistance enabled a 145% quarter-over-quarter increase in scale premiums; the AI insurance customer service agent “Bao Xiaohui” delivered over 1.4 million service sessions in a single month; and an AI quality inspection assistant helped improve employee productivity by 175% versus traditional models.

On the product supply side, “Bao for Seeing a Doctor,” as a market-first, long-term guaranteed renewal product with no health disclosure requirement, continued to iterate in the fourth quarter and introduced a “0 deductible” featured coverage design; the “Sick Applicant” series products continued to receive strong recognition from users, and in Q4 the “Sick Applicant” insurance products contributed nearly 70% year-over-year growth in premiums.

In addition, Waterdrop is also exploring an open collaboration infrastructure to support collaboration among AI Agents. The company’s recently developed Waterkeeper AI assistant—ClawSquare—based on a distributed architecture, is able to support autonomous communication among AI Agents with different functions such as administration, human resources, and R&D, and to complete tasks in coordination.

The research report said that AI is more likely to become a catalyst for accelerating online penetration and improving service efficiency, and Waterdrop’s first-mover advantage enables it to benefit from deeper AI integration—both accelerating business scale expansion and improving operating efficiency.

Waterdrop’s founder and CEO, Shen Peng, said: “In 2025, Waterdrop is anchored to its core strategy of ‘technology-driven growth.’ By implementing AI penetration across the full value chain, we achieve a leap in operating efficiency, with revenue and profit growing rapidly. Looking ahead, the AI wave is reshaping the industry ecosystem at an unprecedented speed. We will systematically complete the strategic leap from ‘using AI tools’ to ‘becoming an AI-native company,’ embedding AI deeply into the entire value chain of customer acquisition, underwriting, claims, and service. With the goodness of technology, we will protect families across the world and create sustainable long-term value for users, partners, and society.”