TDOC - Teladoc: Stock Likely To Be Range Bound Until Guidance Is Revised Upwards

2024-05-31 02:55:39 ET

Summary

• Teladoc reported its Q1 FY24 earnings where revenue and earnings grew 3% and 20% YoY respectively, driven by its Integrated Care Segment.
• Unfortunately, the company’s BetterHelp segment continued to struggle with a decline in paying users, leading to revenue and earnings slowdown of 3.5% and 12% YoY respectively.
• Although the management is optimistic about growth picking up in both its segments in the second half of FY24, it kept its guidance unchanged.
• Assessing both the “good” and the “bad”, I believe that although there are budding signs of a turnaround, there are still too many uncertainties, making the stock a “hold”.

Introduction & Investment Thesis

Teladoc ( TDOC ) is a virtual healthcare services company that has massively underperformed the S&P 500 and Nasdaq 100 YTD. I had put a “hold” rating in my previous post on March 24th, and my thesis was predicated on my belief that investor optimism will likely remain muted until the management can show sufficient evidence of a turnaround in its business segments, especially in BetterHelp. Unfortunately, the stock has dropped 25% since then....

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