Teladoc’s Hold Rating Amid Declining User Base and Strategic Investments

Analyst Allen Lutz from Bank of America Securities reiterated a Hold rating on Teladoc (TDOC – Research Report) and decreased the price target to $7.00 from $8.00.

Allen Lutz has given his Hold rating due to a combination of factors affecting Teladoc’s performance. The company is experiencing a decline in monthly active users (MAUs) for its BetterHelp and Livongo services, with BetterHelp’s global MAUs decreasing by 6.1% year-over-year in April. This decline is more pronounced in the U.S. market, and while Teladoc has indicated some improvement in total users compared to previous months, the overall trend suggests revenue might be at the lower end of guidance.
Despite these challenges, Teladoc is actively working on strategic initiatives, such as acquisitions and international expansion, to drive future growth. However, these efforts require significant investment, which may impact near-term margins. The uncertain macroeconomic environment and shifts in insurance coverage add to the cautious outlook. As a result, while there is potential for future growth, the current conditions justify a Hold rating, with a price objective of $7.00.

In another report released yesterday, Truist Financial also maintained a Hold rating on the stock with a $9.00 price target.