Teladoc Health, Inc. (TDOC) provides virtual healthcare services, also known as telehealth or telemedicine. I am bullish on TDOC stock.
The bearish argument against TDOC would be that the worst part of the COVID-19 pandemic is over, so the need for telemedicine services won’t be as strong going forward.
In general, some folks are hesitant to invest in stay-at-home stocks. They might be concerned that pandemic plays like Teladoc could fade away in the coming month. (See TDOC stock charts on TipRanks)
Admittedly, the company’s financials aren’t perfect. As we’ll see, Teladoc’s fiscal data provides a mixed picture.
In the final analysis, however, investors should find that Teladoc will be able to generate strong revenues regardless of the future course of COVID-19.
A Quick Look at TDOC Stock
The first two months of 2021 seemed quite bullish for TDOC stock. The share price jumped from $200, to a 52-week high of $308 during that time.
In hindsight, this 50% increase was probably a case of too much, too fast. As a result, the TDOC stock price was destined to pull back.
Hopefully, ill-timed traders learned a lesson about chasing stocks after parabolic price moves. Painfully, TDOC stock slid under $130 in May.
By the end of August, the share price was still under $145 per share. Yet, this sideways price action isn’t likely to persist for much longer.
Either the buyers or the sellers will assert themselves at some point. So, let’s take a look at Teladoc’s financial data to determine whether the risk-reward scenario is favorable now for TDOC stock.
An Expanding Market
First and foremost, there’s no need to worry that Teladoc is operating in a shrinking market.
Facts and Factors estimated that the global telehealth market will reach $475.5 billion by 2026.
There’s no easy way to forecast the future course of COVID-19, but it does appear that Teladoc will be able to generate revenues in just about any possible scenario.
Here’s some evidence of this. For the second quarter of 2021, Teladoc’s total visits topped 3.5 million. That’s 28% higher than the result from 2020’s second quarter, during the first wave of the COVID-19 pandemic.
On top of that, Teladoc posted second-quarter 2021 revenues of $503 million, a 109% year-over-year improvement.
Refilling the Pipeline
Don’t misunderstand — it’s going to be challenging for Teladoc to continue growing in the wake of the company’s rapid expansion in 2020.
CEO Jason Gorevic seemed to acknowledge this in a recent quote.
“We’ve had to sort of refill the pipeline, if you will, after just an explosive year last year,” said Gorevic.
Nevertheless, Teladoc’s CEO sounds confident in his company’s future prospects, and he’s evidently not worried about near-term bumps in the road.
“I feel very, very good about continued membership growth. And we look at it over sort of a multiyear or not a quarter-by-quarter question,” said Gorevic.
For full-year 2021, Teladoc expects to take in revenues between $2 billion and $2.03 billion.
Wall Street Weighs In
According to TipRanks’ analyst rating consensus, Teladoc is a Moderate Buy, based 11 Buy and eight Hold ratings. The average TDOC price target is $201.44, implying 36.8% upside potential.
The Takeaway
Some folks might be skeptical about the future of the telemedicine market. However, the data shows that telehealth is here to stay.
There’s no denying that Teladoc’s ascension to fame in 2020 was unexpected, and it won’t necessarily be easy for Teladoc to continue on its incredible growth trajectory.
Yet, the fiscal data and CEO’s confidence indicate that Teladoc is up to the challenge.
Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.
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