Shares of Teladoc Health (TDOC -0.87%) surged 7.9% at 10 a.m. ET Tuesday, and while it cooled off a bit soon after, the stock was still trading 5% higher as of 11:30 a.m. ET Tuesday.
An analyst slashed Teladoc stock's price target by a whopping 44% today. Yes, you read that right; and you could have expected the telehealth stock to fall after such a sharp price cut. The market, though, is paying greater attention to something important the analyst said, especially ahead of Teladoc's upcoming first-quarter earnings report.
Sean Dodge from RBC Capital cut his price target on Teladoc stock to $120 per share from $215 a share, as reported by TheFly.com. Dodge doesn't see any "meaningful inflection" in Teladoc's stock price until later this year.
Now for the good news.
Dodge maintained his outperform rating on Teladoc shares, and his new price target still reflects a solid 82% upside in the stock from Monday's closing price over the next 12 months. Simply put, Dodge is still bullish about Teladoc and its growth prospects. Among other things, the analyst pointed out how his analysis of digital traffic data from BetterHelp indicates strong activity growth in the first quarter.
Here's why this is relevant to Teladoc: BetterHelp specializes in providing virtual mental healthcare services, an area that Teladoc is prioritizing for growth. Presently, nearly 35% of Teladoc's 92 million members access its mental health telemedicine services.
Teladoc will report its first-quarter numbers on April 27 after the market closes. Last quarter Teladoc said it expected to generate revenue between $565 million and $571 million, up nearly 25% year over year at the midpoint. The company also expected to clock 4.3 million to 4.5 million visits in Q1, up from only 3.2 million visits in Q1 2021.
There's a lot to like in that guidance. With an RBC analyst now also hinting at strong growth in the virtual mental health market, investors perhaps even expect Teladoc to raise its previous 2022 revenue growth guidance of around 30% at the midpoint, and are buying the stock in anticipation. I don't blame investors -- I believe Teladoc's long-term prospects make the stock a solid buy at current price.