What happened

Shares of Teladoc Health (TDOC 0.76%) surged Tuesday morning, jumping as much as 8.8%. As of 2:07 p.m. ET, the stock was still up 8.7%.

While the underlying market updraft was no doubt a contributing factor, the digital healthcare stock was given a lift by bullish commentary courtesy of two Wall Street analysts.

So what

Citi analyst Daniel Grosslight has been digging into the potential for Teladoc and has come away seeing the glass as half full. The analyst said that his conversations with institutional investors ahead of Teladoc's third-quarter financial report suggest that even modest results could be met with enthusiasm. 

Grosslight says that investor expectations have been sufficiently reset over the past couple of quarters. If Teladoc were to report results that are in line with expectations -- and even factoring in a modest reduction for its EBITDA guidance for the year -- the stock could still rally. For context the analyst maintains a neutral (hold) rating on the shares and a price target of $38, representing potential upside for investors of 54% compared to Monday's closing price.

Furthermore, DA Davidson analyst Robert Simmons maintained his buy rating on the shares, though he lowered his price target on Teladoc to $40 from $45, but still 62% higher than yesterday's closing price. The analyst believes investors are underestimating Teladoc. Rising healthcare costs will put the company in the driver's seat in upcoming negotiations with insurance providers, which will view telehealth as a less expensive alternative, particularly over the long term. This could result in potential upside to Teladoc's guidance and an increase in its annual forecast, driving its shares higher. 

Now what

These analysts may be on to something. Teladoc investors have certainly had their expectations reset, with the stock down roughly 91% since its high reached early last year. Management is forecasting third-quarter revenue of $610 million at the midpoint of its guidance, which would represent year-over-year growth of about 17%, resulting in adjusted EBITDA of about $40 million. 

The pandemic-related surge notwithstanding, the world is slowly embracing telehealth, and as the market leader, Teladoc is well positioned to benefit from this continuing trend.