The pandemic has kickstarted growth in many nascent industries. For instance, video conferencing has had an unprecedented boost. Likewise, biotech stocks have exploded. And finally, virtual healthcare has seen a huge increase. Few companies have benefited more from that than Teladoc (NYSE:TDOC). With health now more important than ever, demand for the company’s services boomed. So did TDOC stock.
At one point in early August, Teladoc closed at just under $250. It’s been in an extended dip since then, but has still posted impressive growth for 2020. After a relatively flat 2019, investors this year have been rewarded with triple-digits.
The question becomes this, though: can the company keep up that growth in a post-pandemic world?
A Pandemic-Boosted TDOC Stock Price
Virtual healthcare (or telemedicine) found itself in the spotlight in 2020. With the pandemic raging, no one wanted to be in a waiting room at the doctor’s office. As such, TDOC saw a dramatic increase in demand for its services.
According to figures published by the New York Times, during the first peak of the pandemic in March and April, “nearly $4 billion was billed nationally” for telemedical services. In comparison, during the same two months in 2019, the amount billed was less than $60 million.
What’s more, even its third quarter ending Sept. 30 — after the first wave of the pandemic had ended and the summer had brought some relief — Teladoc still reported revenue up 109% year-over-year (YOY).
With those sort of increases, it’s no wonder TDOC stock is up 134% year-to-date (YTD) in 2020.
Telemedicine Has Proved Its Value
However, despite the numbers, those who see telemedicine as the future are going may have to temper their enthusiasm. This remote shift has been necessary and it has also proven that the tech works. But when we return to normal, visits to the doctor will return, too.
Additionally, our experiences this year have exposed some of the weaknesses of the remote approach. For instance, not all patients have access to technology. Also, not all patients are tech-savvy enough to work it, despite companies’ best efforts to simplify the process.
Health insurers also have concerns. For one, there have been disputes over how much doctors should charge for remote appointments. On top of that, both insurers and the medical community are worried about what gets missed in a virtual exam — like blood pressure checks, for example.
However, what this situation has shown us is that telemedicine can play a role in healthcare moving forward — not as a replacement for in-person visits, but as a complement. Telehealth even has potential for use in rural locations, where there are fewer doctors and longer distances to travel.
Kathryn Hird is a professor and dean for the School of Medicine at Australia’s Notre Dame University. In an interview on the post-pandemic future of telemedicine, she suggests:
“We might have a hybrid situation in the future where you have face-to-face consultations for those who need it and telehealth for follow-ups and specific cases.”
So, the pandemic doesn’t mean that virtual medicine will replace in-person visits. But it has definitely accelerated the adoption of telemedicine, too. That should add fuel to this company’s journey toward profitability as well as keep TDOC stock humming.
Bottom Line
Currently, TDOC stock gets an “A” rating in Portfolio Grader. It’s not yet profitable, but this is a company in growth mode with $1.2 billion in cash and cash equivalents. Its recent merger has also made the company an even bigger player in the digital health space.
Right now, The Wall Street Journal is tracking 29 investment analysts who cover Teladoc Health. They give TDOC stock a consensus Overweight rating, with an average price target of $243.31. That represents a healthy 24% upside.
So, the pandemic has kickstarted Teladoc Health in a way that nothing else could. And the company has taken full advantage of the opportunity. As such, look for Teladoc to continue expanding its presence and growth trajectory.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system —with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
