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Here's Why You Should Retain Teladoc (TDOC) Stock for Now
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Teladoc Health, Inc. (TDOC - Free Report) is well-poised to grow on the back of rising access fees and continuous adoption of telehealth services. Its expanding product offerings are likely to bring in more members in the coming days.
Teladoc — with a market cap of $3.6 billion — is a provider of virtual access to high-quality healthcare and expertise. Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for TDOC’s current-year earnings indicates a 98.4% year-over-year improvement. Teladoc beat on earnings in all the last four quarters, the average surprise being 14.2%. This is depicted in the graph below.
Until last year, steep operational costs plagued TDOC’s bottom line, which is now recovering. We expect total expenses to decline 82.2% year over year in 2023. The company expects adjusted EBITDA to be in the range of $320-$330 million for 2023, the mid-point of which suggests 31.8% growth from the 2022 level.
The consensus mark for current-year revenues is pegged at $2.6 billion, suggesting an 8.6% rise from the prior year’s reported number. The company expects total revenues between $2,600 million and $2,625 million in 2023. We expect 2023 access fees to jump 9.2% year over year, which will support the top-line growth.
One of the major challenges TDOC faced in the last few years was overpaying for the Livongo acquisition, which forced the company to take billions in impairment charges. As several projects wrap up, TDOC expects costs to moderate in 2023. The company is focused on margin expansion via its cost-efficiency programs.
Teladoc Health’s business is improving from growing operating strength as demonstrated by its improving cash flow situation. In the last reported quarter, net operating cash flow jumped 67.6% year over year to $105.6 million. Free cash flow of $68 million was higher than $19.8 million in the year-ago period. TDOC expects free cash flow to be $175 million in 2023, higher than the prior year's figure of $16.5 million.
Teladoc Health’s Integrated Care segment is contributing immensely to the overall top-line performance. Chronic Care’s program enrollment is expected to grow, driven by TDOC’s successful bundled chronic care management solutions. Integrated Care’s margin improved 540 basis points in the third quarter, driven by lower expenses and improving performance-based revenue. TDOC expects U.S. Integrated Care members to grow in the range of 7-8% in 2023.
The company’s BetterHelp business is expected to gain from new member growth and stable customer acquisition costs. It is one of the successful acquisitions by the company. We expect the business to witness approximately 12% year-over-year growth this year. With the growing telehealth industry, Teladoc is well-positioned for long-term growth with its digital health interaction platforms.
Key Risks
However, there are a few factors that investors should keep an eye on. The competition in the virtual care space to capture a bigger market share is becoming fierce, which can put pressure on the company's pricing.
Also, Teladoc relies heavily on debt for growth. As such, the high interest rate environment can lead to increased borrowing costs for the company. Nevertheless, we believe that a systematic and strategic plan of action will drive its growth in the long term.
The Zacks Consensus Estimate for Atai Life Sciences’ current-year earnings implies a 68.4% improvement from the year-ago reported figure. It has witnessed four upward estimate revisions over the past 60 days against no movement in the opposite direction. ATAI beat earnings estimates in two of the last four quarters, met once and missed on one occasion.
The Zacks Consensus Estimate for Biodesix’s 2023 earnings indicates a 52.9% year-over-year increase. It has witnessed two upward estimate revisions over the past 60 days against no movement in the opposite direction. The consensus mark for BDSX’s 2023 revenues indicates 31.3% growth from a year ago. BDSX beat earnings estimates in three of the last four quarters and missed on one occasion.
The Zacks Consensus Estimate for Cencora’s fiscal 2024 bottom line is pegged at $12.88 per share, which rose 0.5% in the past 60 days. During this time, COR has witnessed six upward estimate revisions against one in the opposite direction. It beat earnings estimates in all the last four quarters, with the average surprise being 3.9%.
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Here's Why You Should Retain Teladoc (TDOC) Stock for Now
Teladoc Health, Inc. (TDOC - Free Report) is well-poised to grow on the back of rising access fees and continuous adoption of telehealth services. Its expanding product offerings are likely to bring in more members in the coming days.
Teladoc — with a market cap of $3.6 billion — is a provider of virtual access to high-quality healthcare and expertise. Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for TDOC’s current-year earnings indicates a 98.4% year-over-year improvement. Teladoc beat on earnings in all the last four quarters, the average surprise being 14.2%. This is depicted in the graph below.
Teladoc Health, Inc. Price and EPS Surprise
Teladoc Health, Inc. price-eps-surprise | Teladoc Health, Inc. Quote
Until last year, steep operational costs plagued TDOC’s bottom line, which is now recovering. We expect total expenses to decline 82.2% year over year in 2023. The company expects adjusted EBITDA to be in the range of $320-$330 million for 2023, the mid-point of which suggests 31.8% growth from the 2022 level.
The consensus mark for current-year revenues is pegged at $2.6 billion, suggesting an 8.6% rise from the prior year’s reported number. The company expects total revenues between $2,600 million and $2,625 million in 2023. We expect 2023 access fees to jump 9.2% year over year, which will support the top-line growth.
One of the major challenges TDOC faced in the last few years was overpaying for the Livongo acquisition, which forced the company to take billions in impairment charges. As several projects wrap up, TDOC expects costs to moderate in 2023. The company is focused on margin expansion via its cost-efficiency programs.
Teladoc Health’s business is improving from growing operating strength as demonstrated by its improving cash flow situation. In the last reported quarter, net operating cash flow jumped 67.6% year over year to $105.6 million. Free cash flow of $68 million was higher than $19.8 million in the year-ago period. TDOC expects free cash flow to be $175 million in 2023, higher than the prior year's figure of $16.5 million.
Teladoc Health’s Integrated Care segment is contributing immensely to the overall top-line performance. Chronic Care’s program enrollment is expected to grow, driven by TDOC’s successful bundled chronic care management solutions. Integrated Care’s margin improved 540 basis points in the third quarter, driven by lower expenses and improving performance-based revenue. TDOC expects U.S. Integrated Care members to grow in the range of 7-8% in 2023.
The company’s BetterHelp business is expected to gain from new member growth and stable customer acquisition costs. It is one of the successful acquisitions by the company. We expect the business to witness approximately 12% year-over-year growth this year. With the growing telehealth industry, Teladoc is well-positioned for long-term growth with its digital health interaction platforms.
Key Risks
However, there are a few factors that investors should keep an eye on. The competition in the virtual care space to capture a bigger market share is becoming fierce, which can put pressure on the company's pricing.
Also, Teladoc relies heavily on debt for growth. As such, the high interest rate environment can lead to increased borrowing costs for the company. Nevertheless, we believe that a systematic and strategic plan of action will drive its growth in the long term.
Key Picks
Some better-ranked stocks in the broader Medical space are Atai Life Sciences N.V. (ATAI - Free Report) , Biodesix, Inc. (BDSX - Free Report) and Cencora, Inc. (COR - Free Report) . Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Atai Life Sciences’ current-year earnings implies a 68.4% improvement from the year-ago reported figure. It has witnessed four upward estimate revisions over the past 60 days against no movement in the opposite direction. ATAI beat earnings estimates in two of the last four quarters, met once and missed on one occasion.
The Zacks Consensus Estimate for Biodesix’s 2023 earnings indicates a 52.9% year-over-year increase. It has witnessed two upward estimate revisions over the past 60 days against no movement in the opposite direction. The consensus mark for BDSX’s 2023 revenues indicates 31.3% growth from a year ago. BDSX beat earnings estimates in three of the last four quarters and missed on one occasion.
The Zacks Consensus Estimate for Cencora’s fiscal 2024 bottom line is pegged at $12.88 per share, which rose 0.5% in the past 60 days. During this time, COR has witnessed six upward estimate revisions against one in the opposite direction. It beat earnings estimates in all the last four quarters, with the average surprise being 3.9%.