By Sam Boughedda
Teladoc's (NYSE:TDOC) revenue targets could become an overhang as virtual care growth normalizes, according to Jefferies analyst Glen Santangelo.
Santangelo, who maintained a Hold rating and $38 price target on the stock, said in a note to clients Monday that their analysis suggests industry growth across a couple of key virtual care categories may be normalizing faster than expected as the pandemic fades.
"While we appreciate mgt's updated commentary on the 1Q call has done a lot to lower expectations ahead of 2Q - we would highlight consensus is expecting ~20% revenue growth in F22 and F23. We believe expectations may need to be moderated further as TDOC looks to reset expectations in a post-Covid environment," wrote the analyst. "Consensus revenue targets could still be difficult to achieve if industry growth is normalizing.'
Teladoc shares are down 58% in 2022 after falling 2.66% Monday.
Jefferies believes that while management acknowledged a lower yield on marketing spend in BetterHelp, a key driver of the reduced guidance, it still guided this business to grow ~35-40% in F22.
"With that as a backdrop we ran an analysis of website traffic that suggests the whole virtual behavioral health sector (and TDOC) has experienced a moderation of growth in recent months – potentially creating an overhang for shares," explained Santangelo.
"We take some level of comfort given the reduced expectations as well as mgt's history of successfully managing investor expectations last qtr notwithstanding – but with growth seemingly normalizing across the business and management yet to update LT growth targets, we believe there is more room for moderation of future expectations."