Hold On Teladoc Bulls: Stifel Is Cautious Amid Business Model Uncertainty

On Wednesday Stifel issued their Morning Research Summary and initiated Coverage on Teladoc Inc. TDOC. Currently, Stifel rates Teladoc as Hold while a price target is unavailable. Stifel views telemedicine as an attractive investment opportunity, however, Steven Rubis, an analyst at Stifel, wrote, "While we respect management and believe Teladoc faces a significant growth runway, we believe there are several risk factors that outweigh the positives….We believe we need to seek greater clarity around our primary concerns and more attractive valuation levels before potentially becoming constructive, all else being equal." Stifel highlighted 5 key risks that make the firm cautious on Teladoc: 1. Teladoc's business model may be more costly than an in-person visit 2. There is a high amount of competition in the telemedicine sector 3. The market for visits may be more limited than Teladoc's management has led investors to believe 4. There are concerns over both revenue and revenue growth and poor utilization rates 5. Sky high earnings expectations with the majority of price targets being double the current share price Overall while telemedicine represents a potentially attractive investment opportunity, concerns over Teladoc's business model, increased competition, and a limited market of users makes Stifel question the strength of Teladoc going forward. With that in mind, the firm says that they cannot justify valuing Teladoc higher than competitors Medidata Solutions Inc. MDSO and Athenahealth, Inc. ATHN. Currently Teladoc is trading at $19.50. Currently Athenahealth is trading at $163.22. Currently Medidata is trading at $48.05.
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Posted In: Analyst ColorInitiationAnalyst RatingsSteven RubisStifel
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