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Will Teladoc (TDOC) Pull Off a Surprise in Q2 Earnings?

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Teladoc Inc. (TDOC - Free Report) is scheduled to report second-quarter 2017 results on Aug 2, after market close.

Riding on higher revenues, Teladoc delivered a positive earnings surprise of nearly 11.43% in the first quarter. Results reflected healthy growth in subscription access fees and visit fees that led to strong membership gains.

The telehealth service provider has a decent surprise history. In fact, over the trailing four quarters, the company exceeded estimates in each occasion, delivering an average positive surprise of 7.85%. This is depicted in the graph below:

Teladoc, Inc. Price and EPS Surprise

Teladoc, Inc. Price and EPS Surprise | Teladoc, Inc. Quote

Let’s see how things are shaping up for this announcement.

Factors to Consider

Teladoc is likely to benefit in the to-be-reported quarter from significant growth in business driven by its premier consumer engagement capabilities, broad network and scalable platform.

Telehealth services provided by the company are fast gaining acceptance due to their flexibility, cost effectiveness and superior quality which are driving demand. This must have consequently propelled patient visits, causing considerable membership growth. Also, the acquisition of HealthiestYou closed in 2016 is expected to result in higher visits and call volume.

The company has added a number of clients by virtue of its superior service, wide network of doctors and round-the-clock medical assistance. An increasing number of clients will accrue to its top line.

The company is in its growth phase and incurring heavy expenditure in the form of substantial investments made to acquire new clients, build its proprietary network of healthcare providers and develop its technology platform. Thus, the bottom line will see a drain from huge expenses on higher advertising, sales, technology and development, general and administrative functions, and depreciation and amortization. We, however, expect expenditures to decline as the company has started to realize leverage from the scale of its operations.

For the second quarter of 2017, Teladoc expects total revenue between $44 million and $45 million. The company also projects total membership of approximately 20 million to 21.5 million, total visits between 290,000 and 310,000 and net loss per share based on 54.5 million weighted average shares outstanding of 26 cents to 28 cents.

Earnings Whispers

Our proven model does not conclusively show that Teladoc is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Teladoc has an Earning ESP of 0.00%. This is because the Most Accurate estimate stands at a loss of 26 cents per share, in line with the Zacks Consensus Estimate.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Though Teladoc carries a Zacks Rank #3 (Hold), a 0.00% Earnings ESP makes our surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies in the medical space that you may consider as our model shows that these have the right combination of elements to post an earnings beat this time around:

Genomic Health, Inc. (GHDX - Free Report) is expected to report second-quarter earnings results on Aug 1. It has an Earnings ESP of +16.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GenMark Diagnostics, Inc. (GNMK - Free Report) has an Earnings ESP of +3.23% and a Zacks Rank #3. The company is expected to report second-quarter earnings results on Aug 1.

BioMarin Pharmaceutical, Inc. (BMRN - Free Report) has an Earnings ESP of +4.55% and a Zacks Rank #3. The company is expected to report second-quarter earnings results on Aug 2.

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