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Why Teladoc Health Was Not a Healthy Stock Tuesday

What happened

Teleadoc Health (NYSE: TDOC) was punished by the market on Tuesday, following a steep price target cut from an analyst. The telehealth specialist saw its share price erode by over 4%, well steeper than the 1.2% decline of the S&P 500 index.

So what

Deutsche Bank analyst George Hill was the responsible party. This morning, Hill took an ax to his price target on Teladoc stock, chopping it by over 50% from $163 to $81 per share. He is, however, maintaining his hold recommendation. The reasoning behind the drastic price-target change was not immediately clear.

Image source: Getty Images.

Hill is not the only prognosticator reducing expectations for Teladoc. Earlier this month, Piper Sandler's Sean Wieland made a similar move, adjusting his price target downward from $183 to $118. Wieland was concerned with the three-year operating targets presented in the company's investor day last November, which were below expectations.

He also thinks that the company, which has made a series of acquisitions -- notably its nearly $19 billion deal for Livongo Health, signed in 2020 -- is not integrating its operations as effectively as it could. That said, the analyst compliments it for "investing in a unified platform." Despite his concerns, Wieland is maintaining his overweight (buy) recommendation on the stock.

Now what

To me, Teladoc hasn't been a popular stock among investors mostly because it's seen as a pandemic play (hopefully, we seem to be emerging from the worst phases of this plague). But they might be underestimating the specialty healthcare company's power and potential, as it's a leader in a new-ish telehealth market still in front of explosive growth in the coming years.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns and recommends Teladoc Health. The Motley Fool has a disclosure policy.


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