Why Goldman Sachs Is Waiting For Teladoc's Merger Story To Unfold

Teladoc Health Inc’s TDOC acquisition of Livongo Health LVGO was completed on Oct. 30 and has yet to generate impressive growth, according to Goldman Sachs.

The Teladoc Health Analyst: Robert Jones initiated coverage of Teladoc Health with a Neutral rating and $206 price target. 

The Teladoc Health Thesis: The company has been a beneficiary of accelerated adoption trends amid the pandemic and appears to be on track to record around 71% revenue growth organically, Jones said in the initiation note.

“Beyond this year, the story shifts to that of a combined entity where we think legacy TDOC organic growth and synergies targets appear achievable,” the analyst said. “That said, we believe the onus for meaningful upside within legacy TDOC lies on US membership growth in Health Plan lives concurrent with PMPM (per member per month) expansion, which could pose some risk.”  

Outside of the legacy Teladoc company, upside would come from synergies and legacy Livongo, which has less of a track record, according to Goldman Sachs. 

TDOC Price Action: Shares of Teladoc Health were rising 2.73% to $203.06 at last check Friday.