Recent channel checks indicate robust growth for Teladoc Inc TDOC over the next couple of years, backed by strong demand for telehealth, Chardan Capital Markets’ Steven Wardel said in a report.
He initiated coverage of the company with a Buy rating and a price target of $24.
Upside Potential
“Teladoc is mispriced and undervalued compared to its peers due to market concerns about its business model and its currently-negative earnings,” Wardel pointed out. He added, however, that Teladoc was a leader in telehealth services, that its business model was strong and that the company could achieve rapid margin expansion over the next year.
Wardel added that the current share price represented “a good entry point for the name,” and that shares had more than 40 percent upside potential.
Large Addressable Market And Strong Growth Prospects
The U.S. telehealth segment is estimated to be a $29 billion addressable market where penetration was less than 1 percent and growth was more than 30 percent. Teladoc has about a 70 percent market share, and checks indicate the brand has a strong presence, the analyst stated.
“Our channel check calls with employer and Managed Care Organization (MCO) leaders consistently rank telehealth as a top priority for 2017 among ancillary health benefits for the third year in a row, with strong interest in driving employee utilization of telehealth in order to drive down overall medical trend costs,” Wardel wrote. He added, “TDOC is a way for investors to participate in the themes of healthcare consumerization and cost savings.”
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