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Why Teladoc Health Is Sinking Today

By Eric Volkman – Sep 2, 2020 at 2:49PM

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A bullish analyst upgrade is met with skepticism by investors.

What happened

Teladoc Health (TDOC -3.40%), a coronavirus stock if ever there was one, was trading slightly down in mid-afternoon action. Curiously, this was despite a significant analyst recommendation upgrade and price target increase.

So what

Analyst Ravi Misra shifted his recommendation on the stock to buy from the previous hold. In doing so, he increased his price target by what's probably some kind of record lately -- to $252 per share from $157.

Misra is basing his changes on the ever-snowballing migration to remote medical services and the recently announced acquisition of Livongo Health (LVGO), another healthcare sector high flyer.

A Teladoc member using the company's interface.

Image source: Teladoc Health.

While both reasons are valid, it should be kept in mind that Teladoc (and Livongo, while we're at it) has been a stock on fire this year.

As effectively the remote doctor visit stock on the market, it's a no-brainer play on the stay-in-place restrictions engendered by the coronavirus pandemic. Even after a sell-off by skeptical investors following the announcement of the Livongo deal, Teladoc shares are still up by a whopping 166% year to date.

Now what

It feels as if the market is having second thoughts about Teladoc's lofty valuations, particularly considering the company has decided to swallow a big fish with the Livongo deal. Although an impressive company in certain ways, Teladoc's asset to be is similarly loss-making -- a challenge in and of itself -- and its business isn't necessarily a natural fit with that of its future owner.

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

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Teladoc Health Stock Quote
Teladoc Health
$27.60 (-3.40%) $0.97
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