All things being equal, when positive analyst coverage is initiated on a stock, it tends to pop on the news. Yet that wasn't necessarily the case with prominent telehealth specialist Teladoc Health (TDOC 4.58%) on Thursday. Although the shares traded as much as 13% higher on such a development, they ultimately cooled down to only a marginal gain on the day.
The initiator is D.A. Davidson, whose analyst Robert Simmons tagged Teladoc Health as a buy with a price target of $45 per share. This implies upside of nearly 20% from the shares' current level.
In Simmons' estimation, Teladoc is the clear leader in the telehealth sphere, thanks in no small part to the considerable scale it's established and the wide range of its products. He thinks that the company will continue to be the segment's bellwether, powering its overall growth and development.
While investors initially reacted very positively to this take on Teladoc, cooler heads ultimately prevailed. Hanging over the stock is the company's second-quarter results, which were heavily burdened by a $3 billion goodwill impairment charge linked to the pricey 2020 buyout of peer Livongo. This, by the way, was the second big impairment recorded in sequential quarters by Teladoc.
Big accounting charges aren't the only headwinds facing Teladoc at the moment. In the wake of the earnings release, investors are also concerned about declines in both revenue and total visits (a key operational metric for the company).
So while Simmons' enthusiasm for the specialty healthcare stock is certainly heartening for shareholders, it seems they would prefer to see some indication that Teladoc is finding ways to surmount these challenges.