BofA raises Teladoc stock price target to $13.50, keeps neutral rating

On Wednesday, BofA Securities analyst Allen Lutz updated the firm’s outlook on Teladoc Health Inc. (NYSE:TDOC), raising the price target to $13.50 from the previous $11.50. Despite the increase, the firm maintained a Neutral rating on the telehealth company’s shares. The stock, currently trading at $13.04, has shown remarkable momentum with an 89.8% surge over the past six months. According to InvestingPro data, this strong performance comes despite challenging profitability metrics.

The adjustment in Teladoc’s price target comes amid a review of the company’s recent performance, particularly focusing on its online therapy platform, BetterHelp. BofA Securities noted that January saw a slight decline in BetterHelp’s monthly active users (MAUs) in the U.S., with a roughly 3% drop. Additionally, international growth for the platform appeared to slow compared to previous months. InvestingPro analysis reveals the company maintains a solid financial position with a current ratio of 1.73 and operates with a moderate debt level, though analysts don’t expect profitability this year.

Analysts at BofA Securities pointed out that the trajectory seen in January suggests BetterHelp might be shifting its focus towards improving margins, especially as customer acquisition costs remain high. The firm estimates that Teladoc could meet 2025 consensus estimates if BetterHelp maintains its January performance, although they also expressed concerns about potential seasonal weaknesses, particularly in the summer months, which could impact these projections.

Another aspect of Teladoc’s business, Livongo, which focuses on chronic condition management, also exhibited a declining trend with a 16% year-over-year decrease in MAUs for January. This decline is expected to put pressure on Teladoc’s Integrated Care offerings. However, the potential negative impact might be mitigated by increased cross-selling opportunities to members with multiple chronic conditions.

In summary, BofA Securities reiterated its cautious stance on the growth prospects of Teladoc, acknowledging some risks to the Street’s estimates for BetterHelp in 2025. The new price target of $13.50 reflects a valuation multiple of 7.5 times, up from the previous 6.5 times, aligning with higher multiples observed among peers. InvestingPro analysis shows the company trading at an EV/EBITDA multiple of 39.1x, while maintaining a strong free cash flow yield. Subscribers to InvestingPro can access 10 additional investment tips and a comprehensive Pro Research Report for deeper insights into Teladoc’s valuation and growth prospects.

In other recent news, Teladoc Health has been making strategic moves to enhance its healthcare services. The company recently acquired Catapult Health, a move that has garnered attention from analysts at Citron Research and Needham. Citron Research praised Teladoc for its effective use of technology and strategic investments, including a $400 million fund for research and development by 2024. They also noted Teladoc’s shift towards prioritizing profitability and high-margin business operations.

Meanwhile, Needham analysts maintained a ’Hold’ rating on Teladoc’s stock, acknowledging the strategic benefits of acquiring Catapult Health but expressing caution due to ongoing challenges within the company. This acquisition, valued at $65 million, is seen as a step towards integrating diagnostic services into Teladoc’s platform, potentially increasing its value for employer and payor clients.

BofA Securities analyst Allen Lutz updated the price target for Teladoc to $11.50, while retaining a neutral stance. This followed Teladoc’s announcement of its plans to acquire Catapult Health, a move expected to enhance its portfolio of healthcare services. The transaction is set to bolster Teladoc’s existing healthcare offerings and enrich its integrated solutions.

The Catapult Health acquisition is part of Teladoc’s strategic objectives to grow membership, deepen impact on healthcare outcomes, expand internationally, and advance mental health services. Catapult Health’s VirtualCheckup, which allows members to conduct at-home wellness exams and receive personalized health action plans, is expected to complement Teladoc’s existing offerings.

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