It’s time for our routine checkup on Teladoc (NYSE:TDOC), and unfortunately, the outlook isn’t a healthy one for 2024. Sure, Teladoc’s financials are a mixed bag, but I am neutral on TDOC stock because the company’s guidance didn’t live up to Wall Street’s expectations.
Teladoc provides a platform for telehealth or telemedicine services. Digitally connecting healthcare providers and patients seemed like a terrific business model in the wake of the COVID-19 pandemic a few years ago.
In 2024, however, the lockdowns have been lifted, and patients are free to visit their doctors in person. Besides, the days of low borrowing costs and easy-money policy are over and might not return again for a while. Thus, Teladoc needs to demonstrate that it’s a financially viable business with staying power – a task that’s easier said than done.
The Good News about Teladoc
Since TDOC stock is down 25% today, it may be hard to believe that there’s some good news pertaining to Teladoc. Yet, it’s possible to cherry-pick the positive facts from Teladoc’s just-released fourth-quarter 2023 results.
During that quarter, Teladoc grew its revenue by 4% year-over-year to $660.527 million. That’s not massive growth by any means, but at least Teladoc’s revenue isn’t contracting. On the other hand, this result fell short of the consensus estimate of $670.8 million. This isn’t a horrendous miss, though, and shouldn’t prompt a 25% share-price sell-off.
Also, in Q4 2023, Teladoc increased its adjusted EBITDA by 22% year-over-year to $114.443 million. Not everyone pays attention to EBITDA as a bottom-line measurement, but it’s notable that Teladoc’s adjusted EBITDA is positive and growing.
Here’s where it really gets interesting. Teladoc isn’t a profitable business, but the company appears to be heading toward an income-positive profile. Specifically, Teladoc’s net loss narrowed from a jaw-dropping $3.81 billion, or $23.49 per share, in Q4 2022 to a much more palatable net loss of $28.89 million, or $0.17 per share, in the third quarter of 2023.
Meanwhile, Wall Street had expected Teladoc to report a Q4-2023 loss of $0.22 per share. Thus, it could be argued that Teladoc’s quarterly earnings results were a win for the company. Sticklers for profitability, however, might choose to sit on the sidelines and wait for Teladoc to report a profitable quarter.
Teladoc’s Guidance Disappoints Investors
However, if you’re planning to wait around for Teladoc to post a profitable quarter, you might end up waiting for a long time. As it turns out, Teladoc doesn’t expect to be income-positive during the current quarter or in the full-year time frame of 2024.
Now, it’s starting to make sense that today’s traders are dumping TDOC stock. The market is forward-looking, and the remainder of this year could be challenging for Teladoc.
For the current quarter, Teladoc anticipates revenue in the range of $630 million to $645 million. That’s bad news for two reasons. First, it would represent a drop-off when compared to Teladoc’s fourth-quarter 2023 revenue of $660.527 million. Second, Teladoc’s current-quarter revenue forecast fell short of the consensus forecast of $673 million.
Turning back to the bottom line, Teladoc guided for a current-quarter net loss of $0.45 to $0.55 per share. That’s not encouraging since Teladoc’s Q4-2023 net loss was only $0.17 per share. Moreover, Teladoc’s guidance is worse than Wall Street’s expectation of a quarterly net loss of $0.41 per share.
It gets even worse from there. For 2024, Teladoc’s outlook calls for revenue of $2.64 billion to $2.74 billion. In contrast, analysts provided a consensus estimate of $2.77 billion in full-year revenue.
To sum it all up, Teladoc’s management expects to have a lackluster first quarter and full year. Now, I might usually be tempted to buy a stock after it gets a 25% haircut. Yet, I’m just not getting a confident vibe from Teladoc’s management, so I’m staying neutral on TDOC stock.
Is Teladoc Stock a Buy, According to Analysts?
On TipRanks, TDOC comes in as a Moderate based on three Buys and six Hold ratings assigned by analysts in the past three months. The average Teladoc stock price target is $24.38, implying 58.4% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell TDOC stock, the most profitable analyst covering the stock (on a one-year timeframe) is Richard Close of Canaccord Genuity, with an average return of 29.97% per rating and a 60% success rate. Click on the image below to learn more.
Conclusion: Should You Consider TDOC Stock?
As you can see, analysts are generally positive about Teladoc. However, don’t be too surprised if there are some downgrades and price-target cuts in the next few days.
Admittedly, Teladoc’s bottom line improved in 2023. Yet, Teladoc’s net loss may widen during the current quarter and throughout 2024. This makes it difficult to invest in TDOC stock with confidence, so I’m not currently considering taking a share position in Teladoc.
