By Sam Boughedda
Citi analysts said the firm sees a potential 5%+ rally in Teladoc's (NYSE:TDOC) shares post-earnings on Wednesday.
Teladoc will report third-quarter results after the close, and the analysts, who have a Neutral rating and $38 price target on the stock, believe while a guide reset is likely, buyside expectations remain too negative.
"As we head into 3Q results (TDOC reports on 10/26 after the close), it is clear we are in a fickle HCIT market that lacks conviction. Normally, in this type of market, anything but a significant beat and raise would cause a HSD/LDD stock sell-off. Not so with TDOC this quarter in our view." wrote the analysts.
They explained that the firm's buyside conversations heading into earnings indicate that over the past two quarters, expectations have been "sufficiently reset" so that even an in-line quarter, coupled with a slight guidance reduction, will "likely be a positive catalyst."
"We think the most likely scenario for 3Q is a topline beat (driven by Chronic Care and BetterHelp), adj. EBITDA near the mid-point of 3Q guidance (on continued high DTC CACs), and a slight reduction in adj. EBITDA guidance for FY22. We think this will be enough to cause a 5%+ rally in TDOC's shares post earnings," the analysts concluded.
Teladoc shares jumped more than 8% on Tuesday.