The stock market has punished growth investors in recent times. High inflation, rising interest rates, and the war in Ukraine have rattled financial markets around the world, causing investors to exit positions in high-growth companies and flock to value-oriented stocks and bonds. One stock that has been particularly squashed is Teladoc Health (TDOC 0.30%).
The virtual healthcare provider, which experienced a soar in demand during the heat of the pandemic, has nosedived 80% in the past year. Between unfriendly macro conditions, a couple of weak earnings reports, and uncertainty around the company's future in a post-pandemic world, Teladoc continues to face a wide range of challenges. But with most investors falling out of love with the stock, I think it's time to give the telehealth company a good look.
On that note, should investors buckle up and buy shares of Teladoc today? Let's dive in to see why or why not.
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Where does Teladoc stand today?
Teladoc's past couple of earnings reports have disappointed investors, to say the least. In its latest quarter, the telehealth leader grew total sales by 24.6% year over year to $565.4 million, in line with analysts' estimates, but the company shocked investors with its net loss of $41.58 per share, which was primarily driven by a non-cash goodwill impairment charge of $6.6 billion. Management also cut guidance for the year, with total revenue for fiscal 2022 now expected to finish between $2.40 billion and $2.50 billion, down from its initial range of $2.55 billion to $2.65 billion provided at the end of 2021. Likewise, management estimates that its net loss will be around $43 per share.
Wall Street still projects total sales to climb 19.6% year over year to $2.43 billion, which represents solid growth, but investors should closely monitor management's ability to execute on its guidance in upcoming quarters. Even so, there were several bright spots in Teladoc's first-quarter earnings release. Total visits surged 34.9% year over year to 4,510, showcasing the company's ability to expand in spite of a reopening economy, and average revenue per member rose 20.6% up to $2.52 for its 54.3 million U.S. members. And with $836.4 million in cash and cash equivalents and a debt-to-equity ratio of just 17.6%, Teladoc is firmly positioned to ride out any economic storm in the near term.
The stock currently trades at 2.3 times forward sales, which seems more than reasonable provided its future prospects. According to Precedence Research, the global telehealth market is set to grow at a compound annual growth rate (CAGR) of 18.8% through 2030, up to a staggering $225 billion. As an industry leader, Teladoc should benefit immensely from this secular growth trend in the years to follow.
A risky play with massive upside potential
For interested investors, now is the time to buy shares of Teladoc, but it certainly comes with a lot of risk. Management's visibility hasn't been great in recent quarters, which serves as a bad sign for investors. At the same time, the virtual healthcare industry is still in its early innings, and Teladoc has been a key player in pioneering the market up to this point. I don't suggest buying loads of the stock today, but I do think it's worthy of a modest position at current levels.
