Why Is Teladoc (TDOC) Stock Up 5% Today?

  • Teladoc Health (TDOC) stock is rising on solid growth and narrowing losses.
  • Analysts remain concerned about BetterHelp, the company’s mental health unit.
  • If Teladoc can show a profit in the current quarter, TDOC stock could zoom.
The Teladoc logo through a magnifying glass.
Source: Postmodern Studio / Shutterstock.com

Teladoc Health (NYSE:TDOC) stock rose more than 10% overnight after the company reported strong growth and narrower losses with its third-quarter earnings. Now, TDOC stock is up 5% so far today.

For Q3, revenue rose to $611 million, up 17% year-over-year (YOY). Meanwhile, net losses during the period fell 13% YOY to $73.5 million, or 45 cents per share.

Best known for its BetterHelp mental health business, Teladoc said it spent $55.7 million, or 34 cents per share, on stock-based compensation during Q3. It also spent $48.8 million, or 30 cents per share, amortizing intangibles from previous acquisitions.

Absent those expenses, Teladoc might have reported a profit. Now, some analysts predict profit will come in Q4.

TDOC Stock: What’s Up Teladoc?

Many tech names that were big during the pandemic, like Zoom (NASDAQ:ZM), have fallen on hard times. However, telemedicine continues to grow. In fact, the market for virtual doctor visits is expected to grow at a compound annual growth rate (CAGR) of 32% through 2028.

Before these latest earnings, TDOC stock was performing like ZM stock. It had been down 70% on the year. It’s also still down by two-thirds, even after the overnight rise. Analyst expectations remain low, with only 5 of 21 analysts on TipRanks rating shares as a “buy.”

Analysts have been especially concerned about BetterHelp, with several cutting price targets for TDOC even after earnings. The company doesn’t break out BetterHelp in its earnings, but it showed 14% growth in visits YOY for the quarter. For the nine months, however, visit growth was 25%.

In addition to BetterHelp, a major online advertiser, Teladoc also offers management for chronic conditions like diabetes. Its programs for large enterprises are aimed at lowering corporate healthcare costs for those who self-insure, either directly or through a carrier like UnitedHealth (NYSE:UNH).

All told, Teladoc is a long-term play that got a big short-term boost from the pandemic. Moving forward, investors should focus on the value of its platform, its potential with chronic conditions and discount growth in the mental health segment. If the company does report a profit come January, TDOC stock could take off.

On the date of publication, Dana Blankenhorn did not hold (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.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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