TDOC with Nobias technology: Down 50%, Is TelaDoc Health Finally A Bargain?
2020 created a perfect storm for the acceleration of the existing telehealth trends due to the COVID-19 pandemic which not only created a high demand for healthcare visits, but also put in place social distancing restrictions. Because of this, we saw stocks like TelaDoc Health (TDOC) soar.
TDOC shares rose from $101/share at the end of 2019 to nearly $200/share on 12/31/2020. TDOC’s rally continued early into 2021 as well, with the stock hitting its 52-week high of $308.00/share back in February of this year. However, since then we’ve seen a distractic sell-off here with the optimism surrounding the TelaDoc shares fading and the stock coming back down to Earth a bit (from a valuation standpoint).
Today, TDOC trades for just $135.4, meaning that shares have fallen more than 55% from their highs. Year-to-date, TDOC shares are down 31.98%. And with that in mind we wanted to take a look at what the credible authors that the Nobias algorithm tracks have been saying about this beaten down growth stock as of late.
Nobias 5-star rated analyst, Rachel Warren, recently published an article where she highlighted two of her favorite places where investors should be putting $1,500.00 to use right now. She said, “In an ever-unpredictable market, long-term investing takes patience. Most people won't get rich through stocks overnight; it takes time to realize and sustain meaningful portfolio returns.” And therefore, for the sake of her article, she was on the lookout for best-in-breed high growth picks that have the potential to generate real wealth over the long-term. One of her choices was TDOC.
Warren said, “It seems that some investors have dismissed telemedicine provider Teladoc Health (NYSE:TDOC) as a pandemic stock in recent months -- passing on it as vaccinations accelerate and many people go back to work, school, and social activities in person. However, it would be a mistake to count out Teladoc as a solid, long-term investment.” With regard to the stock’s huge year during the pandemic, Warren noted, “There's no doubt 2020 was a big year for Teladoc. It reported 10.5 million medical visits on its platform last year, made major acquisitions of fellow telemedicine providers InTouch Health and Livongo, and grew its revenue by an incredible 98% from 2019.” However, she continued, saying, “But the need for quality telehealth services isn't just evaporating now that we have reached a different stage in the pandemic, and the proof has been evident in Teladoc's quarterly reports so far in 2021.”
Warren highlighted TDOC’s triple digit y/y revenue growth during 2021 as well, saying that in Q1 TDOC’s top-line grew by 151% which was then followed by a 109% y/y growth performance during Q2. She noted that patient visits are on the rise on the digital health platform as well, with y/y growth here coming in at 56% during Q1 and 28% during Q2. She believes that this is the best-in-breed option for investors looking for exposure to this growing market.
Warren wrote, “Teladoc is the leading telehealth company in the world. Consumers know and like its platform, and happy customers mean more revenue. According to results from the J.D. Power 2021 U.S. Telehealth Satisfaction Study, Teladoc garnered "the highest ranking and outperformed all other direct-to-consumer providers in all study subcategories, including customer service, consultation and enrollment.” And therefore, TDOC is a name that Warren likes over the long-term, concluding her piece by saying, “I believe you can buy and hold for years, and long-term investors should consider taking advantage of its current discount from earlier highs.”
Warren isn’t the only highly rated analyst that we’ve seen publish bullish reports on TDOC recently. Trevor Jennewine, a Nobias 5-star rated analyst also recently highlighted his bullish stance in an article titled, “New Investor? 2 Smart Stocks to Buy Right Now” Jennewine began his piece saying, “Teladoc is disrupting the multi-trillion dollar healthcare industry. Its virtual-first platform connects patients with healthcare professionals, allowing them to attend appointments from the comfort of their own homes. More importantly, Teladoc leans on a provider network of over 50,000 clinicians, with expertise in over 450 sub-specialties, making it the most comprehensive telehealth solution available.”
Highlighting one of the primary reasons for the stock’s recent decline (de-accelerating growth) Jennewine did note that, “During the most recent quarter, Teladoc's U.S. memberships grew by just 1%, a sharp deceleration from the 92% growth in the prior year. As a result, the stock currently sits 50% below its all-time high. But I think that overreaction creates a buying opportunity for long-term investors.” However, he believes that this company remains in a great position to disrupt the traditional healthcare industry, saving money for providers and patients alike, and therefore, he concludes that TDOC is an attractive bargain after its 50%+ sell-off.
Jennewine concluded his piece saying, “Last year, the average time between a member's request and a telehealth appointment was just 10 minutes. And Teladoc's virtual platform saves clients $472 per visit compared to alternative solutions, according to Veracity Analytics. Put another way, Teladoc makes healthcare faster, cheaper, and more convenient. And as more patients become comfortable with the idea of engaging with clinicians remotely, I think Teladoc will see strong demand from employers, insurance companies, and health systems.”
Adria Cimino, a Nobias 5-star rated analyst, also recently highlighted TDOC as a potential bullish bet for investors, touching upon its recent M&A activity which she believes will increase the company’s growth potential over the long-term. Cimino highlighted TDOC’s $18.5 billion Livongo acquisition from late 2020, saying, “The company's acquisition of Livongo last year helped it step up its game in chronic-illness management. Now, more than 20% of chronic-care members are enrolled in multiple Teladoc programs. That's up from 6% a year earlier, which is key because more than 40% of adult Americans suffer from more than one chronic condition.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Brian Withers, another Nobias 5-star rated analyst, also touched upon the fact that TDOC is expanding its capabilities across the healthcare sector during a recent podcast in which he said, “When you look at across all of these from general medicine behavior health, hospitals and health systems, ongoing, things like hypertension. The addressable market, $121 billion, just in the U.S. is massive for Teladoc, and I think they'll continue to be the leader here and continued to click away at this addressable market.”
Obviously, TDOC won’t capture 100% of the market share here, but this just goes to show the massive upside potential that this company has so long as it can continue to innovate and grow. The world is moving in an ever-digital direction. It seems clear that the healthcare industry will continue to shift in this direction as well. And therefore, TDOC has an opportunity to post strong growth over the long-term, which is exciting for many investors.
Right now, 75% of the credible authors that we track with the Nobias algorithm express a “Bullish” opinion of TDOC shares. The average price target amongst the blue chip (4 and 5-star rated) Wall Street analysts which we track that cover the stock is $195.20. Compared to TDOC’s current share price of $135.4, this implies upside potential of 42.6%.
In her piece, Cimino notes that TDOC isn’t profitable yet; however, even with this being said, she notes, “I expect consumers' interest in telehealth and Teladoc's investments in growth will help it get there.” It appears that the vast majority of the Nobias community of credible authors agrees.
Disclosure: Nicholas Ward has no positions in any stock mentioned in this article. Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.