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Teladoc Stock: Is Correction an Opportunity?
Stock Analysis & Ideas

Teladoc Stock: Is Correction an Opportunity?

As the world went into lockdown, the adoption of telemedicine and virtual healthcare solutions accelerated. Moreover, easing regulatory measures further contributed to the sector’s growth. Thanks to the favorable operating environment, companies operating in this space, including Teladoc (TDOC), witnessed higher member visit volumes that drove their financials, and in turn, their share price. 

It’s worth noting that Teladoc’s total visits increased by 156% in 2020. Furthermore, its revenues soared 98% year-over-year. Additionally, the momentum in its top-line continued in 2021 (reflecting benefits from acquisitions). However, normalization in visits volume growth on its platform and higher competitive activities, mainly Amazon’s (AMZN) expansion of its virtual healthcare services across the U.S., weighed on its share price. (See Healthcare Stock Comparison on TipRanks)

Teladoc stock, which more than doubled in 2020, has erased some of its gains and is down about 28% this year. (See Teladoc stock charts on TipRanks)

TipRanks’ Stock Investors tool suggests that investors currently have a Very Negative outlook on Teladoc stock, with 2.9% of investors who hold portfolios in TipRanks decreasing their exposure over the past month.  

Although the stock corrected quite a bit, I have a bullish outlook on Teladoc due to the rollout of new products, including myStrength Complete and Primary360, and expansion into new markets. 

Showing confidence in Teladoc’s new products, Ryan MacDonald of Needham stated that the “we are encouraged by TDOC’s strong pipeline conversion as the company announced a large CCM (chronic care management) deal with HCSC (Health Care Service Corporation is one the top health insurer in the U.S.) and is having strong early success with Primary360.”

The 5-star analyst noted that the demand for Teladoc’s mental health services remains elevated, and the launch of myStrength Complete could further accelerate the demand in the B2B channel. 

MacDonald added that Teladoc “signed multiple new chronic care agreements with health systems and several Primary360 deals with large employer customers that will be launched in 2H21.” He expects these Primary360 deals to generate higher PMPM (per-member-per-month) than historical averages, which could boost the overall PMPM. 

MacDonald has a Buy rating on Teladoc. However, he lowered the price target to $205 (42% upside potential) from $235.

On TipRanks, Teladoc commands a Moderate Buy consensus rating, based on 11 Buys and 8 Holds. The average Teladoc price target of $201.44 implies 39.5% upside potential to current levels.

Meanwhile, TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Teladoc is currently Very Positive, with hedge fund managers increasing their cumulative holdings in TDOC by 1.9 million shares in the last quarter.

Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.

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