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Can Telemedicine be a Market Savior on Rising Corona Scare?

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Consequent to last week’s massive sell-off on the coronavirus fear, the Dow tanked nearly 1,100 points, NasDaq 799 points and the S&P 500 Index 344 points. Investors have addressed it as one of the worst weeks for global investment markets since the 2008 financial crisis.

This week kick-started with the market painting a bright picture — thanks to the upbeat market sentiment on news of the G7 (Group of Seven) emergency plans for a collective effort to control the damages associated with the coronavirus outbreak. However, the euphoria seems to be short lived, as following the Mar 3 meeting of the G7 finance ministers and central bank governors, the major indices are once again shredding off points.

It is evident that the epidemic has sent jitters across share markets, as the Fed made an emergency rate cut and the World Bank declared $12 billion of immediate support to all COVID-19-affected countries. Also, at the G7 meeting, several other coordinated policy actions flowed in. Therefore, such a scenario is compelling investors to critically link the latest rate cut as a clear indicator of another economic recession impending in a decade.  

In this regard, we note that the Organisation for Economic Cooperation and Development (OECD) has already lowered its 2020 growth forecast to 2.4% from the already-dismal 2019’s rate of 2.9%. However, with COVID-19 spreading from China to as many as 60 countries drastically, it apprehends broader contagion across the globe. This might lower global growth to 1.5% in 2020, half of OECD’s previous prediction made last November.

Telemedicine Set to Thrive

Amid such economic mayhem, while growth has taken a backseat for most sectors, COVID-19 has, however opened up growth prospects for a few — the telemedicine-focused Online Medical Service industry being one of these. Going by the World Health Organization’s (WHO) definition, telemedicine is the delivery of healthcare services, where distance is a critical factor. Distance can be virtually reached by all healthcare professionals using information and communication technologies for the exchange of valid information for diagnosis, treatment and prevention of disease, injuries and many others.

Despite the U.S. government’s measures to make telemedicine mainstream for the past few years, primarily to minimise healthcare cost and increase access of care, the sector is yet to receive mass acceptance. Nevertheless, post the COVID-19 outbreak, the situation has drastically changed. A TIME report states, “If extreme measures like mass quarantines come to pass, telehealth could finally have its bittersweet moment in the spotlight, potentially generating momentum that proponents hope will continue once life returns to normal.”

Telemedicine stocks received an impressive response, when in February, the Centers for Disease Control and Prevention asked healthcare service communities to increase the use of telemedicine in broader ways. Added to this, the House recently passed an emergency spending bill, allowing medicare reimbursement for telehealth during crisis situations.

This is, undoubtedly, bringing all telemedicine stocks, with robust prospects to become attractive picks in the days to come, into limelight. Here are four such stocks:

Teladoc Health, Inc. TDOC: Over the past two months, with COVID-19 emerging as a global pandemic, shares of Teladoc have surged 50.3%, as against the 0.8% decline of the broader medical sector. The company has setup an interactive arrangement that allows patients to talk to a U.S. board-certified physician by phone or video, in a bid to counter this crisis. Further, it is currently enabling health systems to provide virtual care on a greater scale through the technology and capabilities of both Teladoc Health, as well as its newly-acquired InTouch Health platform. This stock is among the few with strong growth potential at this moment. The stock currently carries a Zacks Rank #3 (Hold).

CVS Health Corporation CVS: The company’s health insurance division Aetna (which was merged in 2018) too is developing and expanding its telehealth offerings, in an effort to restrict the spreading of COVID-19. Going by a CNBC report, Aetna is working on virtual care options, such as video visits, to evaluate and treat viruses remotely, and minimizing exposure to other potentially-contagious viruses. The stock is already on a solid growth trajectory, with its shares rallying 22.3% in a year’s time compared with the 10.6% rise of the broader industry. This trend is anticipated to improve in the upcoming period. The stock also carries a Zacks Rank of 3, at present.

Unitedhealth Group Inc UNH: This Zacks #2 (Buy) Ranked company already has several telehealth services, including fee apps, which can be utilized to boost its customer base during such turbulent situations. The stock has appreciated 21.1% over the past year, as against the 0.1% decline of the broader industry.

Anthem, Inc ANTM: Investors can also consider picking this leading health insurer right now. The company is currently working on boosting adoption of its telehealth app called LiveHealth Online. Per a CNBC report, a huge number of physicians and other health professionals have been lined up on this app, who can be consulted through LiveHealth Online. This Zacks Rank #3 stock has gained 4.9% in the past month, as against the industry’s 3.7% decline.

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