KeyBanc: 6 Reasons To Buy Teladoc

Checks at the recent Health Care Information and Management Systems Society conference and follow-up discussions with Teladoc Inc TDOC have made KeyBanc Capital Markets incrementally positive on the company, the firm said in a Wednesday note. 

The Analyst

Analyst Donald Hooker reiterated an Outperform rating on Teladoc and lifted the price target from $41 to $50, suggesting 16-percent upside from current levels.

The Thesis

  • Teladoc is experiencing strong growth in its emerging hospital and health system business, Hooker said in a Wednesday note. About 75 percent of health systems now offer or plan to offer telehealth services, the analyst said. Hooker expects the hospital and health system to double revenues again in 2018.
  • Behavioral health is foundational to the growth narrative at Teledoc, Hooker said. The company's behavioral health revenue has  more than doubled annually over the last few years, the analyst said. In 2018 and 2019, KeyBanc expects this segment to add about 1,000 basis points to revenue growth.
  • Hooker sees significant emerging opportunity for Teladoc in Medicare Advantage, as a recent law allows MA plans to include telehealth services in their bids to CMS starting in 2020. The analyst said he proejcts a sizeable $500-million-plus greenfield revenue opportunity from MA beyond 2019.
  • KeyBanc expects the company to break even on a free cash flow basis and achieve positive free cash flow in 2019.
  • Teladoc has notched early successes in gain-sharing and performance-based contracts, with a contract with Aetna Inc AET performing ahead of expectations, according to KeyBanc. 
  • Teladoc's cross-selling related revenue synergies in the 2018/2019 benefits enrollment season are expected to benefit from the company's recent acquisition of Best Doctors. The company sees a $200-million run-rate subscription fee revenue opportunity in the U.S. employer market alone from cross-selling, Hooker said. 

The Price Action

Teladoc shares have more than doubled over the past year and ended Wednesday's session up modestly at $42.95.The stock was trading down more than 1 percent in Thursday morning trading. 

Related Links:

Analyst: We're Downgrading Teladoc, But We Remain Very Bullish

This IPO Could Mean Access To A Doctor Anywhere, Anytime

Posted In: Donald HookerKeyBanc Capital MarketsAnalyst ColorHealth CarePrice TargetReiterationAnalyst RatingsGeneral

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.