The market is underestimating the potential of the company, believes one pundit tracking its fortunes.
Absent of any other stock-moving news, a 25% increase in an analyst’s price target for Teladoc (TDOC 11.64%) got the stock moving northward on Tuesday. It ended up closing the day almost 12% higher on the move, for a much better performance than the essentially flat trajectory of the bellwether S&P 500 index.
25% more bullish
News of the increase hit the headlines shortly before the market open. Jefferies prognosticator Glen Santangelo now feels Teladoc is worth $10 per share, up from his previous estimation of $8. In making the change, Santangelo maintained his buy recommendation, as the new target is nearly 10% higher than the stock’s latest closing price.
In the research note detailing the modification, the analyst waxed bullish about a dramatic change in the performance of Teladoc’s BetterHelp brand. He wrote that its web traffic for the BetterHelp site saw year-over-year growth in July and August, following 12 months of declining numbers.
This should help the unit do much better in its third quarter than the current analyst consensus suggests — collectively, pundits following Teladoc stock expect BetterHealth to post a revenue decline of 11% year over year, Santangelo added.
An undervalued and underappreciated stock, pundit says
In his new Teladoc analysis, Santangelo warned that prognosticator estimates for the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) are “modeled somewhat aggressively,” due to what he termed “outlier” estimates by certain analysts. Nevertheless, he considers Teladoc to be a good discount buy, not least because investor sentiment is extremely negative (as indicated by its relatively high short interest, at around 16%).
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group and Teladoc Health. The Motley Fool has a disclosure policy.