Teladoc’s (NYSE:TDOC) share price is heading higher today, but the stock is still enticing as the virtual-care leader’s results indicate a substantial bottom-line improvement. I am bullish on TDOC stock because it’s still trading at a relatively low price point, and it looks like investors are finally ready to stop selling and start buying.
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Teladoc provides virtual healthcare and is variously described as a telehealth or telemedicine company. Patients count on Teladoc for a broad range of virtually-delivered care; notably, the company just expanded its offerings in the areas of weight management and pre-diabetes care. As you may recall, Teladoc was red-hot on Wall Street when the COVID-19 pandemic struck in 2020, and it was risky for patients to visit doctors.
However, for the most part, the COVID-19 pandemic is behind us, and Teladoc is deeply out of favor among investors. Don’t dismiss Teladoc as a has-been, though, as the company’s financials — which, admittedly, aren’t perfect — suggest that today’s shareholders might expect a healthy return on their investment in 2023.
Negative Income Might be a Deal-Breaker for Some TDOC Investors
To be completely fair and balanced, I must acknowledge something that may be a deal-breaker if you prefer to invest in currently profitable businesses. The fact is, Teladoc isn’t profitable. This doesn’t mean Teladoc is a “zombie,” but if it’s a sticking point for you, then you certainly don’t have to buy TDOC stock.
Before you make a final decision on Teladoc, however, you might want to learn all of the relevant facts about the company. Sure, Teladoc’s not in perfect financial condition, but the company is improving its bottom line. 2022’s fourth quarter was particularly painful, as Teladoc posted EPS of -$23.49, badly missing the analyst consensus estimate EPS of -$0.25. This disappointing result is, without a doubt, one of the reasons TDOC stock has remained so low; once worth hundreds of dollars, the stock fell to the $22 level not long ago.
On the other hand, a turnaround may be afoot as Teladoc stock jumped 6% today, following the release of its first-quarter 2023 earnings results. While Teladoc doesn’t expect to be profitable this year, we can at least say that the company started off 2023 with an upbeat quarter. Could there be a buy-and-hold opportunity with TDOC stock now?
Teladoc Starts to Dig out of a Financial Hole
If you’re willing to give it some time, Teladoc stock is a worthy investment as the company firms up its financials. Don’t expect a miracle or an immediate turnaround, though; Teladoc’s wounds will take a while to heal.
It’s encouraging to see Teladoc report Q1-2023 results that are much better than the horror story of 2022’s fourth quarter. The biggest positive surprise is Teladoc’s first-quarter net loss of $69.228 million, which is a whole lot better than the year-earlier quarter’s net loss of $6.675 billion. Converting this to EPS, Teladoc lost $0.42 per share in Q1, versus a skin-crawling loss of $41.58 in the first quarter of 2022. Furthermore, Teladoc’s EPS result beat analysts’ consensus forecast of a $0.50 per-share loss.
So, a relief rally is entirely justifiable with TDOC stock. Even if the shares gain 6% or 7% in a single day, they’re still far below the 52-week high of $44.66. Besides, Teladoc is demonstrating top-line growth, as the company’s Q1-2023 revenue grew 11% year-over-year to $629.2 million. Looking ahead, Teladoc expects to generate $635 million to $660 million in revenue for the current quarter, which implies another improvement from the first quarter.
Additionally, Teladoc projects Q2 EPS in the range of -$0.45 to -$0.55, which wouldn’t be too horrible, considering some of the company’s alarming past results.
Is TDOC Stock a Buy, According to Analysts?
Turning to Wall Street, TDOC stock comes in as a Moderate Buy based on five Buys and 14 Hold ratings. The average Teladoc stock price target is $29.53, implying 7.4% upside potential.
Conclusion: Should You Consider Teladoc Stock?
If you insist on sticking to profitable businesses as an investor, then Teladoc probably isn’t your cup of tea. Still, I encourage you to conduct your due diligence on Teladoc, which appears to be digging out of its financial hole this year.
Just because Teladoc isn’t a celebrity on Wall Street anymore doesn’t mean there’s no market left for telemedicine services. If you anticipate growth in the telehealth market generally and foresee further improvement in Teladoc’s fundamentals, then feel free to consider the stock.
