Stock of the Week: Teladoc

The company eliminating waiting rooms at the doctor’s office

Andrew Willis 25 January, 2021 | 4:39AM

 

 

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Some of the most successful stocks in the pandemic have soared as services went online. Zoom, Shopify and Amazon solved our communications and consumer needs – but what about our health?

Enter Teladoc, a leading provider of virtual healthcare technology. The company provides online doctor consultations alongside a suite of software that offers ongoing care in fields like cardiology, diabetes, weight and mental health management.

Amidst a massive medical crisis, it’s surprising to see Teladoc still trading around our fair value estimates – foregoing, so far, the same level of hype that we’ve seen inflate other pandemic-related stocks to unrealistic valuations.

One of the main reasons is our increased confidence in the staying power of growth achieved, beyond the pandemic. Equity analyst Soo Romanoff says the acquisition and integration of similar online health service providers InTouch and Livongo went better than expected, offering diversification of services and new growth opportunities. And the company’s subscription-based revenue model is set to recur yearly at around 80%!

(Stock slide) As of late last year, the company had more than 54 million members and 50,000 licensed providers, allowing it to match patients within 10 minutes of requesting care or a consultation. These kinds of game-changing figures have us raising our fair value estimate by around 23% to $225 U.S. dollars a share.

With an ageing North American population, ongoing mobility restrictions and opportunities to improve the acceptance of telemedicine insurance coverage with the new U.S. administration, we think this company’s in good shape.

For Morningstar, I’m Andrew Willis.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Teladoc Health Inc190.10 USD-1.19

About Author

Andrew Willis

Andrew Willis  is Content Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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