Doximity (DOCS -0.85%) and Teladoc (TDOC 3.31%) are both leading companies with similar market caps in the healthcare space, but there are some important differences as well. In this Motley Fool Live segment from "The Pharma & Biotech Show," recorded on March 23, Fool.com contributor Taylor Carmichael evaluates the two stocks and lets potential investors know what to look out for.
10 stocks we like better than Doximity, Inc.
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Doximity, Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of April 7, 2022
Taylor Carmichael: What Doximity is, is the Internet website for all the other doctors in real life hospitals, this is Facebook for doctors. It is the place that all of the brick-and-mortar doctors, so to speak, are going to network to find jobs, to find the next hospital where they want to work. Where nurses go where EMT has got 80 percent of doctors are on Doximity. It is the networking site for the medical industry. Ninety percent of medical students are on Doximity in America. It's already won.
I feel like Teladoc Health is top dog and first-mover in what it does. It's really interesting to compare these two companies because I think they're both going to succeed. But Doximity is fascinating because it's hugely profitable. They have huge profit margins. Whereas Teladoc is more like Amazon, where it's doing that superfast growth. I think their margins are going to be a lot less probably than what Teladoc has now. Teladoc [Editor's note: Taylor meant to say "Doximity" here.] has got this amazing business model and it's just so profitable, even though they are growing fast, which is highly unusual in these fast-growing tech companies usually don't see that huge amount of profitability so quickly. That's why the market is still giving Doximity of very high multiple compared to Teladoc. Like we're talking how others have POS of two or POS of one Doximity has a POS at 26. There's still expensive but they were way more expensive three months ago, four months ago, where they had a POS of 300 or something.
These are two wonderful companies. They have similar market caps now actually with Teladoc being I think 10 billion and Doximity being nine billion. They're both growing fast. Doximity is profitable. Teladoc is not. Teladoc has a tiny multiple, so it's cheap. Doximity has a high multiple, so it's expensive. But probably, arguably anyway, a better business model, or at least a more quickly profitable company.
