Can shares of Teladoc Health (NYSE:TDOC) be resuscitated? The Purchase, Harrison, New York-based company that facilitates telemedicine (virtual visits between doctors and patients) has seen its share price fall 55% this year to $88.81 as enthusiasm for healthcare services delivered online fizzles in the wake of the economic reopening. Worse, the decline in TDOC stock is only accelerating with the share price collapsing by 34% over the past month.
While some analysts say that virtual healthcare is here to stay, Teladoc Health cannot seem to shake the perception that it is a company that benefitted greatly from pandemic lockdowns and was grossly overvalued as a result.
Overlooking the Benefits
The steep decline in Teladoc Health’s share price seems curious when scrutinizing the company’s market leading position and persuasive data. Teladoc is the market leader when it comes to telemedicine, having built itself a network of more than 50,000 physicians and 450 health specialists that customers can consult with and get medical care from online and via teleconferences.
And data shows that a growing number of consumers are taking advantage of the convenience offered by virtual healthcare. Teladoc reported that it facilitated 3.9 million telemedicine visits in this year’s third quarter, which was 37% higher than the same period of 2020 at the height of the pandemic.
Perhaps more impressive, the 3.9 million virtual medical appointments scheduled by Teladoc Health during this year’s third quarter was nearly three times as many as the 1.3 million virtual healthcare visits facilitated by American Well Corp. (NYSE:AMWL), the second biggest telemedicine company in the U.S., during Q3.
In September of this year, Teladoc Health was ranked number one among direct-to-consumer providers in an independent telehealth satisfaction survey conducted by well-regarded consumer research firm J.D. Power. Another, separate study found that telemedicine saves patients (and by extension health insurers) between $19 and $121 per visit.
If all this weren’t enough, Teladoc Health counts half of Fortune 500 companies as clients, and consulting firm McKinsey & Co. forecasts that the American virtual healthcare market will reach $250 billion by 2030. Fortune Business Insights estimates the global telehealth market will hit $636 billion by 2028. Clearly, Teladoc has a lot working in its favor.
One Big Issue
Despite its success and growth, Teladoc Health has one big issue working against it: the company is unprofitable. Teladoc’s most recent third quarter results showed that the company’s revenue soared 81% year-over-year to $522 million.
However, its net loss grew to $84.3 million, or $0.53 per share, compared with a net loss of $35.9 million, or $0.43 per share, in the year earlier. The lack of profitability is weighing down TDOC stock and contributing to negative sentiment around the company. But here too, Teladoc Health offers a silver lining to shareholders in the form of upbeat forward guidance.
At an investor day event held in November, Teladoc guided for fiscal 2022 revenue of $2.6 billion, up from analysts’ forecast of $2 billion in revenue. Looking out even further, the company said it expects fiscal 2024 revenue to cross $4 billion, translating to a compound annual growth rate (CAGR) of nearly 30%.
That’s strong growth, and Teladoc forecasts that it will only accelerate in coming years even as the Covid-19 pandemic recedes. The future growth projections help to explain why the median price target analysts currently have on TDOC stock is $161, which is 81% higher than where the share price currently sits.
The lowest 12-month share price forecast of $107 is 22% higher than the current level at which the stock is changing hands.
TDOC Stock Can Only Go Up From Here
The view on Wall Street appears to be that Teladoc Health’s stock has been beaten down too much. While the company’s financial results remain a concern, the market and growth opportunities ahead of the company are bright and it remains the market leader when it comes to telemedicine in the U.S.
And despite the pandemic fading into history, virtual healthcare remains a growing industry that is not only here to stay but likely to dominate in coming decades as more of our lives move online.
Investors looking for a beaten down stock that’s cheap right now should consider Teladoc Health. All indications are that this patient can be revived. 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.