Zacks says 150% upside for Chinese water filter maker Viomi

Zacks Small-Cap Research (Zacks SCR) thinks Viomi Technology, a Chinese manufacturer of AI water filtration systems that is listed on the Nasdaq, has the potential to rise 150% versus current quotes. This comes against the backdrop of underperformance by Viomi shares since December, driven by concerns about Trump tariffs. In its report, Zacks SCR lays out why these concerns are overdone. Since publication, Viomi is up 11%.

Zacks SCR values Viomi at $3.75 per share, nearly 150% higher than the current market price – on Friday, February 14, the stock closed at $1.51 per share (yesterday, February 17, U.S. markets were closed for a holiday).

Zacks SCR updated its outlook, following initiation in December, amid underperformance by Viomi shares since then. It attributes that to factors beyond the company’s control, such as concerns about consumer sentiment in China and the impact of the 10% tariff on all Chinese goods imposed by Trump. Zacks SCR believes the significance of the tariff for Viomi is overblown – firstly, because most of Viomi’s products are sold in China and, secondly, because most of its peers in the U.S. also manufacture their products in China and are therefore exposed to the same tariff headwinds. 

Since the beginning of 2025, Viomi’s shares are up about 5%, with most of the growth occurring in the last week. In fact, since February 10 – the day that Zacks SCR issued its report – the stock has gained 11%.

The company was founded in 2014 and supplies water purification systems with a mission to use “AI for better water.” Its AI technology remotely monitors water quality in real time, reminds users to replace filters, and enables one-click reordering, while its intelligent waterway self-cleaning extends filter lifespan and reduces water purification costs, the company claims. Viomi targets an audience of young, modern “new middle-class” consumers, positioning its brand as “tech fashion,” according to its website.

Until recently, Viomi was “a large, multi-line, unprofitable home appliance and connected home device company,” according to Zacks SCR, before a strategic reorganization last year, when it divested underperforming segments to focus on home water solutions.

In its latest earnings, for the first half of 2024, the company reported a 20% year-over-year decline in revenue to CNY1 billion ($143.1 million) alongside a gross margin expansion of almost 3.0 percentage points to 24.8%. Net profit reached CNY5.6 million ($0.8 million), versus a net loss of CNY57.3 million in the same period in 2023.

Zacks SCR believes that investors have not fully appreciated the company’s transformation. It forecasts that Viomi continuing operations will remain profitable in 2024 while growing at over 10% through 2026.