Teladoc Health, Inc. ( NYSE:TDOC ) is a tech company that provides virtual healthcare services on a business-to-business basis in the United States and internationally. It’s promoted as the next level of online medicine, striving to give patients the portion of healthcare which can be done via an online video call.
Teladoc is constantly partnering up with physicians and healthcare businesses in a bid to activate economies of scale and set a firm foothold in the healthcare market share.
Considering the market uptake, the pivotal moment will be the second and third quarter results, which will show if Teladoc was a pandemic phenomenon or if it does indeed have a future.
There are two fundamental risk factors to this business: competition and barriers to entry. Both go hand in hand, as it can be argued that scheduling an online meeting with a doctor does not present a significant challenge for a technology company if they wish to engage in this segment. Likewise, current competitors, such as local businesses, may choose to increase the sophistication of their online services and seriously hurt the platform.
Investors need a good perspective on the current performance of the company in order to make better decisions grounded on the fundamentals. Let’s dive in!
The first-quarter results for Teladoc were recently released, making it a good time to revisit its performance. Revenues were in line with expectations, at US$454m, while statutory losses grew to US$1.31 per share.
Some investors may be concerned by the increase in costs, but we should keep in mind that the company will in-fact need to invest much more in growth, while treading the fine line between being a young prosperous or distressed company.
We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
The consensus forecast from Teladoc Health's 29 analysts is for revenues of US$2.01b in 2021, which would reflect a huge 47% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 52% to US$2.86.
The average price target was unchanged at US$232, suggesting that the business — losses and all — is executing in line with estimates.
The consensus price target is just an average of individual analyst targets, so — it could be handy to see how wide the range of underlying estimates is.
Currently, the most bullish analyst values Teladoc Health at US$300 per share, while the most bearish prices it at US$162.
By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 17% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that analysts expect Teladoc Health to grow much faster than its industry.
The company is moving fast to secure its position and raise enough capital allowing it to provide advanced services beyond the scope of smaller competitors.
Investors should carefully observe for the post pandemic growth, as it will show the real potential of the platform.
Analysts also re-confirmed their estimates, suggesting sales are tracking in line with expectations — and our data suggests that revenues should grow faster than the wider industry.
All in all, Teladoc has a long road to walk, both in establishing itself for mass market adaptation and finding a path to profitability down the line.
Simply Wall St analyst Goran Damchevski and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.