Teladoc Health has established itself as an industry leader and is poised to see shares rise, according to DA Davidson.
The firm on Thursday initiated coverage of the company with a $45 price target. That represents a nearly 20% jump from where the stock closed Thursday's trading session at $37.99 per share.
"We believe Teladoc has established itself as the leader in telehealth, with operational scale and a completeness of offerings that allow it to offer differentiated service to customers," Robert Simmons wrote in a note.
Teladoc has a "strong flywheel" to keep delivering results due to its complete suite of virtual medical offerings, which will soon be integrated into one cohesive product, Simmons wrote.
In addition, its entry into primary care is likely to create more lasting relationships with patients in the future and its ability to utilize data for better patient outcomes is unmatched in the industry, the analyst said.
The company was a big beneficiary of the Covid pandemic, which led to a huge runup in shares that's since dissipated. Still, telehealth has steadily increased over the last year leaving market share of the industry up to be captured by Teladoc.
"Much of the growth has been in non-specialized tools, such as Zoom and Teams; as time goes on, we expect more of this to shift over to Teladoc and other similar providers," wrote Simmons. "Some regulatory barriers remain to broader adoption, but physician, patient, and regulator acceptance and comfort with telehealth are all growing, and we expect its penetration to increase over time."
And, the roughly 88% slump in shares from its all-time high of $308 in Feb. 2021 has likely gone too far, making today's share price an attractive entry point for investors looking to buy the stock.
"Some of this multiple contraction is a reflection of the company's naturally slowing growth as COVID hit its anniversary, but we believe represents an over-correction," said Simmons. "From here, with revenue growth likely in the upper teens, and FCF margin positive and rising, we believe the current multiple and stock price provide significant upside."
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August 12, 2022 at 06:43PM
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DA Davidson says Teladoc shares are a buy here after nearly 90% rout - CNBC
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