After a solid third-quarter earnings report, virtual healthcare company Teladoc’s (NYSE:TDOC) stock looks to be on the mend following a bruising decline over the last six months.
TDOC stock has climbed about 10% higher since the telemedicine company delivered better-than-expected financial results on Oct. 27. That rise brings the share price up a total of 18% over the past month to now change hands at around $150 per share. However, to illustrate how far the stock had declined prior to its current upswing, the share price remains down 25% on the year and 54% off of its all-time high.
Nevertheless, the current breakout gives hope to shareholders who have stuck by the New York-based company. It got clobbered when investors rotated into stocks that are likely to benefit from more businesses reopening.
Strong Earnings
Teladoc reported third-quarter financial results that soundly beat the expectations of Wall Street. The company’s revenue of $521.66 million was $232.85 million more than in the same quarter of 2020. Its earnings per share (EPS) loss of 53 cents was 24% better than the loss of 70 cents per share that analysts had predicted. This surprise earnings beat, coming after a disappointing miss on the top and bottom lines in the second quarter, surprised many analysts and sparked the rally that’s continuing with TDOC stock. Over the last four quarters, Teladoc has surpassed consensus EPS estimates twice.
Highlights from the Q3 results include total visits of 3.9 million, up 37% year-over-year; 70% of bookings were multiproduct sales up from 50% in the year-ago quarter; and organic revenue growth of 32% annualized.
Regarding forward guidance for this year’s fourth quarter and full year 2021, Teladoc has forecast revenue of $539 million and a net loss per share of 69 cents. For all of this year, Teladoc said it expects total revenue of around $2.02 billion. And that it anticipates total visits to be between 14.5 million and 14.7 million, up 6% from its previous guidance.
Buying the Dip
The strong Q3 earnings bolster the case of bullish investors who focus on the fact that Teladoc remains the market leader in a virtual healthcare market that’s been estimated at $250 billion by consulting firm McKinsey & Co. While Teladoc faces growing competition from both small start-ups and established giants such as Amazon (NASDAQ:AMZN), it retains several competitive advantages that keep it ahead of the pack when it comes to telemedicine. These advantages include a broad array of services, high customer satisfaction ratings, and an impressive customer base that includes 40% of Fortune 500 companies.
It is this market leading position that has some notable Wall Street bulls buying the dip in TDOC stock. Ark Invest’s Cathie Wood has continued to buy Teladoc stock as its price slumped throughout the spring and summer. As recently as mid-October, Wood bought 198,000 shares of Teladoc stock, bringing her total purchases since Sept. 21 of this year to 1.7 million shares. And those purchases were made without selling a single Teladoc share.
Bank Wells Fargo & Co. (NYSE:WFC) recently came out with a recommendation for investors to also buy the dip in Teladoc stock, saying it sees a big future for virtual healthcare.
Invest In TDOC Stock’s Future Potential
Much of what is holding back Teladoc’s stock is the fact that the company remains unprofitable. But it is still a relatively young, fast growing company. One that it is a market leader in telemedicine, a sector that has a lot of potential that extends beyond the Covid-19 pandemic.
The latest earnings beat should be viewed as a vote of confidence in the company. Along with the fact that leading Wall Street titans and analysts continue to back Teladoc. With its share price appearing to have hit bottom and reversing higher, now is an ideal time for investors to jump onboard and ride Teladoc to some gains. TDOC stock is a buy.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
