Once a public market darling during the worst of the Covid-19 pandemic, Teladoc (NYSE:TDOC) recently benefitted from a surge of relevance. Management announced that it intends to expand its telehealth services to weight management and prediabetes programs. This includes prescribing new weight-loss medications. On the news, TDOC stock initially popped up 10%, though it pared back some gains to around 6%.
According to Reuters, Teladoc previously only provided doctor-based services to diabetes and hypertension patients only. However, with the recently disclosed program expansion, the telehealth specialist will now cater to a larger market.
Additionally, the news agency stated that Teladoc’s pivot aligns with the rising popularity of weight-loss drugs. In particular, Novo Nordisk (NYSE:NVO) received approval from the Food and Drug Administration (FDA) for once-weekly Wegovy (semaglutide) injections for the treatment of obesity in teens aged 12 years and older. Eli Lilly (NYSE:LLY) also anticipates approval for tirzepatide for obesity later this year.
According to Grand View Research, the global weight management market reached $132.7 billion in 2021. Experts project that the segment will expand at a compound annual growth rate (CAGR) of 9.7% between 2022 and 2030. At the culmination of the forecasted period, the sector should produce revenue of $298.7 billion.
TDOC Stock Faces Both Opportunities and High Risks
Per the aforementioned Reuters report, analysts estimate that approximately 42% of adults in the U.S. live with obesity. Further, one-in-three American adults have prediabetes. Therefore, TDOC stock “benefits” from a robust addressable market.
As well, with the global weight management market accelerating at nearly a double-digit CAGR, Teladoc seems to have found another epidemic that it can positively impact. Nevertheless, significant risks exist for TDOC stock.
While shares may have performed well this year — gaining more than 22% since the January opener — they’re down significantly in the trailing one-year period. One of the vexing issues for TDOC stock centers on sustaining interest following the Covid-19 disruption.
At the time, few people wanted to be around others as the mysterious SARS-CoV-2 virus wreaked havoc on society. Therefore, Teladoc organically benefitted from surging demand. Indeed, TDOC stock represented one of the very few securities that did not suffer a pronounced downside in March 2020.
However, with fading fears came changing fortunes. Early this year, Teladoc laid off 300 nonclinical staff amid financial losses and mounting uncertainties. Sumitomo Mitsui Trust Holdings (OTCMKTS:SUTNY) cut its stake in TDOC stock in February.
Why It Matters
At the moment, data from TipRanks reveals that analysts assess TDOC stock as a consensus “moderate buy.” Individually, the ratings break down as five “buys,” 13 “holds” and zero “sells.” On average, the experts’ price target comes out to $29.63, implying an upside potential of roughly 8%.
On the date of publication, Josh Enomoto 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.
