Stay-At-Home Stock Play Teladoc Set For Q3 Beat, DA Davidson Says In Bullish Initiation

The telehealth company Teladoc Health Inc TDOC has posted strong gains during the coronavirus pandemic.  

The Teladoc Analyst: D.A. Davidson analyst Hannah Baade initiated coverage of Teladoc with a Buy rating and $250 price target.

The Teladoc Thesis: Teladoc, being a pure play software company directly benefiting from COVID-19, is growing at a more than 60% pace organically, Baade said in an initiation note.

Telehealth utilization soared to 16% during COVID-19, and it could go up to 25% in the long term, equating to a $250-billion market going forward, the analyst said.

Acquisitions have further expanded markets and provided leverage to popular direct-to-consumer markets, she said.

Teladoc has completed 11 acquisitions that either expand its  product offerings or customer base, Baade said.

The impending Livongo Health Inc LVGO acquisition significantly enhances the business model, supported by adding millions of new members and a new class of disease monitoring, the analyst said.

"Competitively, no other company has the scale and depth of solutions as Teladoc and we expect the company to remain firmly ahead of the curve as it continues to grow both organically and inorganically."

Additionally, Teladoc's relatively conservative guidance for the September quarter sets it up for a likely beat, she said.

The consensus revenue estimate of $281.4 million is already above the $280-million midpoint of the guidance range, Baade said.

Given the faster growth assumptions relative to peers, the premium valuation that Teladoc shares command is justified, according to D.A. Davidson. 

TDOC Price Action: At last check, Teladoc shares were rising 6.37% to $215.56.

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