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Teladoc (TDOC) Hits 52-Week High, Will the Rally Continue?
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Teladoc Health, Inc. (TDOC - Free Report) stock gained traction from a strong second-quarter 2018 earnings release as well as a solid guidance. The stock hit a 52 week-high of $71.9 on Aug 10.
What is driving the stock?
This telehealth service provider rides high on an inorganic growth profile, strong demand for its telehealth services, an increasing clientele base and a gradual march toward a break-even. All these factors have held stock in a good shape.
Since the release of the company’s results on May 1, 2018, shares have rallied 21%, outperforming the industry’s growth of 7.6%. In a year’s time, the stock has returned 134%, significantly higher than the industry’s rise of 28%.
Let’s look at the catalysts for this bull run:
Investors note that the company is in growing stage and consistent losses over the past several quarters are a result of heavy expenditures incurred on marketing and substantial investments made to acquire new clients, build a proprietary network of healthcare providers and develop the technology platform.
All the more encouraging is the fact that these investments are bearing fruit, as reflected by a strong increase in membership, visits and client base.
These upsides have contributed to an upsurge in revenues at the company, which has witnessed a CAGR of 74% during the 2014-2017 period. The revenues skyrocketed 110% year over year in the first half of 2018.
The company’s inorganic strategies have provided enough fuel to its overall growth. A number of acquisitions, namely Best Doctors, HealthiestYou, StatDoc Advance Medical and BetterHelp completed in the past three years have enhanced growth in membership and visits. Both metrics registered a CAGR of 42% and 70%, respectively, during the 2014-2017 phase. The two were also up 44.5% and 65%, respectively, in the first half.
Investors are also confident about a decline in expenditures, with the company gradually starting to realize leverage from the scale of operations. In the fourth quarter of 2017, the company had reported a positive EBITDA (first ever since its IPO), which shows that it is on track to achieve profitability.
Though the company posted negative EBITDA in first-quarter 2018, management has issued a positive guidance for adjusted EBITDA for the second quarter and was able to deliver on it. In the second quarter, adjusted EBITDA came in at $2.7 million, against an adjusted EBITDA loss of $5.1 million in the year-ago period.
Will the Rally Continue?
Teladoc is fast gaining ground in the rapidly growing U.S. telehealth services industry, with ample scope for flourishing, owing to rising health care costs following inefficient care, duplication of services, significant waste and extreme variation in access, cost and quality of care.
Teladoc can address this inefficiency in care by providing superior quality of care through a platform that caters to consumer demand and physician availability in real-time and in various modalities such as video, web, mobile and telephone. Moreover, the emergence of technology, via big data and analytics, cloud-based solutions, online video and mobile applications, offers the company with huge opportunity for growth.
Upbeat guidance for 2018 further lends a positive insight into its performance, which in turn should support the rise in stock price.
CareDx beat estimates in the second quarter by 20%.
OpGen delivered positive surprises in each of the last four quarters, with an average beat of 7.96%.
PRA Health Sciences delivered positive surprises in each of the last four quarters, with an average beat of 4.50%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Teladoc (TDOC) Hits 52-Week High, Will the Rally Continue?
Teladoc Health, Inc. (TDOC - Free Report) stock gained traction from a strong second-quarter 2018 earnings release as well as a solid guidance. The stock hit a 52 week-high of $71.9 on Aug 10.
What is driving the stock?
This telehealth service provider rides high on an inorganic growth profile, strong demand for its telehealth services, an increasing clientele base and a gradual march toward a break-even. All these factors have held stock in a good shape.
Since the release of the company’s results on May 1, 2018, shares have rallied 21%, outperforming the industry’s growth of 7.6%. In a year’s time, the stock has returned 134%, significantly higher than the industry’s rise of 28%.
Let’s look at the catalysts for this bull run:
Investors note that the company is in growing stage and consistent losses over the past several quarters are a result of heavy expenditures incurred on marketing and substantial investments made to acquire new clients, build a proprietary network of healthcare providers and develop the technology platform.
All the more encouraging is the fact that these investments are bearing fruit, as reflected by a strong increase in membership, visits and client base.
These upsides have contributed to an upsurge in revenues at the company, which has witnessed a CAGR of 74% during the 2014-2017 period. The revenues skyrocketed 110% year over year in the first half of 2018.
The company’s inorganic strategies have provided enough fuel to its overall growth. A number of acquisitions, namely Best Doctors, HealthiestYou, StatDoc Advance Medical and BetterHelp completed in the past three years have enhanced growth in membership and visits. Both metrics registered a CAGR of 42% and 70%, respectively, during the 2014-2017 phase. The two were also up 44.5% and 65%, respectively, in the first half.
Investors are also confident about a decline in expenditures, with the company gradually starting to realize leverage from the scale of operations. In the fourth quarter of 2017, the company had reported a positive EBITDA (first ever since its IPO), which shows that it is on track to achieve profitability.
Though the company posted negative EBITDA in first-quarter 2018, management has issued a positive guidance for adjusted EBITDA for the second quarter and was able to deliver on it. In the second quarter, adjusted EBITDA came in at $2.7 million, against an adjusted EBITDA loss of $5.1 million in the year-ago period.
Will the Rally Continue?
Teladoc is fast gaining ground in the rapidly growing U.S. telehealth services industry, with ample scope for flourishing, owing to rising health care costs following inefficient care, duplication of services, significant waste and extreme variation in access, cost and quality of care.
Teladoc can address this inefficiency in care by providing superior quality of care through a platform that caters to consumer demand and physician availability in real-time and in various modalities such as video, web, mobile and telephone. Moreover, the emergence of technology, via big data and analytics, cloud-based solutions, online video and mobile applications, offers the company with huge opportunity for growth.
Upbeat guidance for 2018 further lends a positive insight into its performance, which in turn should support the rise in stock price.
Zacks Rank and Stocks to Consider
Teladoc carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are CareDx, Inc. (CDNA - Free Report) , PRA Health Sciences, Inc. and OpGen, Inc. (OPGN - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CareDx beat estimates in the second quarter by 20%.
OpGen delivered positive surprises in each of the last four quarters, with an average beat of 7.96%.
PRA Health Sciences delivered positive surprises in each of the last four quarters, with an average beat of 4.50%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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