The demand for telemedicine and virtual healthcare services spiked amid the pandemic, giving a significant boost to the shares of the companies offering such services, including Teladoc (NYSE: TDOC).
However, a slowdown in revenue growth, economic reopening amid accelerated vaccination, and general selling in the high-growth stocks erased a considerable portion of gains. For instance, Teladoc stock has corrected over 51% in six months. Moreover, it is down about 28% this year.
What’s Next?
Teladoc recently delivered better-than-expected Q4 results and announced a partnership with Amazon (NASDAQ: AMZN). Despite the positive development, Teladoc stock continues to underperform.
While Teladoc delivered relatively good Q4 results, its Q1 revenue guidance fell short of the consensus estimate. Teladoc expects to report revenues in the range of $565 million to $571 million compared to the Street’s estimate of $589 million.
Jefferies analyst Glen Santangelo stated that TDOC stock and expectations “have come down in recent months.” However, he expects “modest pressure as investors digest lower-than-expected profitability and implied ramp throughout.”
Santangelo recommends a Hold on TDOC stock.
Along with Santangelo, BTIG analyst David Larsen remains sidelined on TDOC stock. Larsen views the Amazon deal as positive. However, he sees membership growth as a long-term growth driver.
Larsen doesn’t expect Teladoc to revise its revenue and membership guidance upward for 2022 due to the Amazon deal. The analyst added the Amazon deal could increase TDOC’s utilization. However, he doesn’t expect “a significant increase in membership.”
On February 28, Larsen’s report stated that Teladoc stock was trading at an EV multiple of 3.6x its 2023E revenue, which the report called a fair price despite it being higher than the “sub-sector average of 2.0x.”
The Bottom Line
The ongoing digital shift could lead to higher adoption of virtual healthcare services in the future years. However, they are still far from mainstream. Moreover, the economic reopening and tough year-over-year comparisons have led to normalization in the growth rate.
However, due to the significant decline in its price, TDOC’s stock forecast on TipRanks shows significant upside. The average Teladoc price target of $99.65 implies 52.3% upside potential from current levels.
Meanwhile, Wall Street is cautiously optimistic about TDOC stock. Its Moderate Buy consensus rating on TipRanks is based on 16 Buys and 11 Hold recommendations.
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