Analyst: We're Downgrading Teladoc, But We Remain Very Bullish

Analysts at Baird Equity Research no longer consider Teladoc Inc TDOC to be a stock investors should necessarily be buying, although holders of the stock may not want to sell either. The firm's Matthew Gillmor downgrades Teladoc's stock rating from Overweight to Neutral with an unchanged $36 price target.

The downgrade of the telehealth company is not a "negative call," and the company's long-term growth potential and strategy remain unchanged, Gillmor commented in his downgrade note (see his track record here). But at the same time, a more than 100-percent gain since the start of 2017 and 62 percent since initiating coverage in March many of the positive developments have mostly played out, including:

• 1. Re-accelerating visit utilization.
  2. "Diminishing" noise concerning competitor behavior and pricing.
  3. A compelling valuation relative to its growth prospects.

"As the undisputed leader, with an increasingly broad set of virtual health capabilities (re: Best Doctors, etc.), we think TDOC is well positioned to capture this market opportunity," Gillmor wrote. "We simply think the stock may take a temporary breather and consolidate recent gains."

Finally, the stock's forward revenue multiple has typically fluctuated in a range from 4x to 6x yet the current valuation of 6.3x is still "reasonable," the analyst concluded. In fact, the current multiple could imply a 20 percent upside based on 2019 numbers.

At time of publication, shares of Teladoc were down 6.26 percent at $33.70.

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