Stryker shares tumble despite strong Q2 results and raised guidance
On Thursday, Stifel analysts maintained their Hold rating on Teladoc Health Inc. (NYSE:TDOC) shares with a consistent price target of $9.00. The firm’s analysis followed Teladoc’s fourth-quarter results for 2024 and the guidance for 2025, which fell below market consensus but aligned with Stifel’s own projections. With a current market capitalization of $1.6 billion and an impressive gross margin of 70.82%, InvestingPro analysis suggests the stock is currently undervalued. The guidance indicated that the expected performance would be more heavily weighted towards the latter part of the year.
Shares of Teladoc fell by 16% in morning trading, a movement that analysts believe may be attributed to a combination of factors. These include the company’s earnings miss, a guidance that leans towards the end of the year, and the stock’s prior uptrend since the start of the year. Despite recent volatility, InvestingPro data shows the stock has gained 54.35% over the past six months and 20.9% year-to-date. Analysts anticipate that the stock price will likely continue to experience volatility due to the lack of immediate catalysts and a considerable short interest, representing 14% of the float. For deeper insights into TDOC’s valuation and growth potential, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The new CEO of Teladoc is reportedly focusing on several initiatives that could potentially draw incremental interest over time. With annual revenue of $2.59 billion and operating with a moderate debt-to-equity ratio of 1.05, these efforts include stabilizing customer acquisition costs and reversing revenue declines for BetterHelp, their direct-to-consumer platform, expanding the business-to-business behavioral segment, growing the international business, which is currently seeing success, and driving member growth along with higher levels of user engagement. Analysts recognize the latter as the most significant opportunity, albeit a challenging one to realize.
Following the morning’s trading session, Teladoc’s stock was trading at 6 times its expected 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA) and 11 times its expected 2025 unlevered free cash flow (UFCF). This valuation is deemed consistent with Teladoc’s current profile, which does not anticipate growth. InvestingPro analysis reveals a GREAT overall financial health score of 3.07, suggesting potential resilience despite current challenges.
In other recent news, Teladoc Health Inc. reported its fourth-quarter 2024 earnings, revealing revenue of $640.5 million, slightly above the forecast of $638.5 million. However, the company missed earnings per share (EPS) expectations, reporting -$0.28 compared to the anticipated -$0.23. Teladoc’s full-year revenue for 2024 was $2.6 billion, a 1% decrease from the previous year, while the company ended the year with $1.3 billion in cash and cash equivalents. Needham maintained a Hold rating on Teladoc shares after the mixed results, citing uncertainties around the company’s growth and profitability. The firm’s outlook for fiscal year 2025 suggests flat to slight revenue growth, with adjusted EBITDA expected to range between $278 million and $319 million. In the BetterHelp division, there was a sequential increase in average paying users during the fourth quarter, although challenges remain in stabilizing this segment. Teladoc is focusing on international expansion and transitioning to a weekly payment model to address these issues. Despite efforts to balance growth and profitability, the company faces ongoing challenges, including medical cost inflation and mental health demand.
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