Amid Challenging Backdrop, This Analyst Previews Teladoc Health's Upcoming Q3 Earnings

RBC Capital Markets has cut the price target for Teladoc Health Inc TDOC from $53 to $35 but reiterates the Outperform rating.
The analyst urges some near-term caution into late-October Q3 results based on an increased risk to the guidance given the continued deterioration in the BetterHelp consumer backdrop, particularly into Q4 as mgmt intends to curtail ad spending significantly.
RBC does not expect much in the way of 'conviction-changing' updates on the two primary debates:
- The progression of the FY23 selling season
- The achievability of the steep implied ramp in Q4 EBITDA.
The adjustments primarily reflect the weakening consumer environment—supported by an analysis of third-party digital traffic data relating to Teladoc's direct-to-consumer behavioral health business BetterHelp.
Elongated sales cycles across the payer end-market will likely impact TDOC's ability to drive '23 growth.
Additionally, the analyst lowered its valuation multiple to 2.5x (from 3.4x) 2023 revenue estimate due to incremental compression across its peer group.
Price Action: TDOC shares are up 6.31% at $28.31 on the last check Wednesday.

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