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Teladoc Health (TDOC) an Even Better Buy As Credit Suisse Upgrades

Monday, August 17, 2020 | Steve Anderson
Teladoc Health (TDOC) an Even Better Buy As Credit Suisse Upgrades

Any investor out there likely has a litany of stocks that they'd wished they'd bought in on before they became famous household names, or priced so enormously that buying a share requires a huge investment in its own right. Teladoc Health (NYSE:TDOC) increasingly seems to be one of those firms, and it recently picked up one more reason to pay attention: a ranking upgrade at Credit Suisse.

Credit Suisse Likes What It Sees at Teladoc

The upgrade was not a large one, at last report; it was simply a one-step upgrade from “neutral” to “outperform,” but that was enough to capture the attention of investors and give the company's pre-opening stock a bump. The company gained 3.1% just on the pre-market action.

Better yet, the company not only got an overall assessment upgrade from Credit Suisse, but Teladoc also got a boost in its price target. Credit Suisse rolled up the price target from $225 to $249, a move which likely gave potential investors that much more reason to get off the fence and put some cash behind Teledoc.

One of the biggest reasons Credit Suisse made the upgrade was thanks to Teladoc's recent merger with Livongo Health (NASDAQ:LVGO). Since Livongo makes a range of healthcare devices, from blood glucose meters to smart scales and beyond, that dovetails naturally with Teladoc's advances in the field of telemedicine. Telemedicine allows individuals to actually seek—and even acquire—medical care via remote connection, and Livongo's line of connected tools represent a way for individuals to effectively—if lightly—stock a complete line of diagnostic tools in their own homes.

Our own research, just last week, gave Livongo Health a buy recommendation on the strength of the merger with Teladoc, so it stands to reason the converse is true as well.

Right Place, Right Time

That connection to the telemedicine market is perhaps the most likely catalyst for Teladoc's growth, and with Livongo backing it up, it looks like a much more attractive play overall. Some reports put the total market for telemedicine, by 2026, to reach $185.66 billion. Thanks to the merger, Teladoc is in a better position than ever to take advantage of that growth and seize a substantial portion of it for itself.

That by itself would be an exciting reason to take notice of Teladoc, but it actually gets better thanks to the recently-emerged pandemic of Covid-19. The transmission rates of the disease have prompted widespread—and highly controversial—social distancing policies, in which most of the world's business was done at arm's length. That business which could not be so done, in fact, is still in many cases either restricted or shut down outright.

Even doctor's offices, which should be considered “essential” by any standard, weren't exempt. Telemedicine allows the best possible way for doctors' offices to continue operating even amid government reaction, and right now, Teladoc is well on its way to being a, if not the, leader in the field.

The Fundamentals Are Solid Too

Teladoc isn't just riding Livongo's coattails to success, either; based on the second-quarter earnings reports, only recently turned in, the company saw 82% more revenue in the 2020 second quarter than it did in the 2019 second quarter. Total visits were up 203% in that same interval, hitting 2.8 million total. While certainly the coronavirus helped, the growth had been visible well before Covid-19 started up. Six-month revenue comparisons reveal an increase of 63% as total visits were up 144%.

Essentially, people across the spectrum, from regular patients to government regulators, are starting to take telemedicine—and by extension Teladoc—much more seriously. Using a quick video chat to identify some symptoms or even just ask if some particular bump, bruise, or skin blotch looks “bad” will likely infuse peace of mind in patients all over. Certainly young and fretful parents concerned about an infant's crying at 2:00 in the morning will welcome the ability to connect to a doctor at that hour and let the doctor listen to see if this is just a tired baby sobbing at an inability to sleep or the start of some intestinal horror that may well threaten the newborn's very life.

Teladoc's already advanced work in telemedicine, coupled with conditions that make telemedicine that much more attractive and a new merger with a company that can supply hardware to make its own work even better by extension make Teladoc an attractive buy. Throw in the fact that Credit Suisse seems to agree and that makes an already sweet pot even more so.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Livongo Health (LVGO)1.2$139.77flatN/A-349.42Buy$110.94
Teladoc Health (TDOC)1.3$230.06-9.6%N/A-160.88Buy$238.57
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7 Low-Priced Dividend Stocks Under $10

The recent trading activity surrounding low-priced stocks like GameStop (NYSE:GME) is a reminder to investors of the high-risk nature involved with these stocks. Often when a stock trades for under $10 (also termed a penny stock), it is trading that low for a reason. The company may not be profitable, or in the case of GameStop, it finds itself with a business model that no longer fits with consumer trends.

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View the "7 Low-Priced Dividend Stocks Under $10".

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