Entering text into the input field will update the search result below

Teladoc Stock: A Fundamentally Mispriced Industry Leader

Oct. 05, 2021 9:30 AM ETTeladoc Health, Inc. (TDOC)40 Comments


  • Teladoc is trading at a market cap of just ~$20B (<10x P/S), a figure less than the price it paid for Livongo last October.
  • In this note, I lay out Teladoc's vision and analyze its financials to determine fair value and expected returns.
  • Due to asymmetric risk/reward on offer, I rate Teladoc a strong buy at $127.
  • This idea was discussed in more depth with members of my private investing community, Beating the Market. Learn More »
Online Consultation with their Doctor

Geber86/E+ via Getty Images

Investment Thesis

Teladoc Health (NYSE:TDOC) is a comprehensive, customer-centric virtual care provider that aims to deliver whole-person care with better outcomes at lower costs. A year on from its incredible acquisition of Livongo, Teladoc's market capitalization has dropped below the price it

At Beating The Market, we focus on making lives meaningfully better through investing. To join a rapidly growing community of like-minded, long-term growth investors --> Click Here 

This article was written by

Ahan Vashi profile picture

I am the Investing Group Leader at "The Quantamental Investor" - a community pursuing financial freedom via bold, active investing with proactive risk management. At TQI, we help retail investors build and preserve generational wealth in public markets. To do so, we share highly concentrated, risk-optimized model portfolios that meet investor needs across different stages of the investor lifecycle. In addition to deep fundamental research, all of our investment ideas are thoroughly vetted using a mix of quantitative, technical, and valuation analysis. Furthermore, a TQI membership includes access to our proprietary software tools and group chats. If you're interested in learning more about our community, visit: The Quantamental Investor

In addition to my investing experience of 10+ years, I have a professional background in equity research, private equity, and software engineering. Prior to joining The Quantamental Investment Group LLC, I served as the Head of Equity Research at a growth-focused SA Investing Group. In the past, I have worked as an Associate Fellow with Jacmel Growth Partners, a middle-market private equity firm in New York. And my resume also includes a stint at Capgemini as a software engineer. With regards to academia, I hold a Master of Quantitative Finance degree from Rutgers Business School and a Bachelor of Technology degree in Electronics and Communication Engineering, whilst I am also pursuing the CFA certification (Level 2 candidate).

If you're interested in reviewing my performance, feel free to view this tracker: Performance tracker for TQI's SA Premium (public) research.

If you would like to connect with me, please feel free to send me a direct message on SA or leave a comment on one of my articles!

To learn more about our company and services, visit: The Quantamental Investment Group LLC's website - TQIG | Home

Analyst’s Disclosure: I/we have a beneficial long position in the shares of TDOC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (40)

aged well this article and price projections! Well Done
bengalesq profile picture
SO recent read on macro by u got me linked to this which I read - I understand you may be kind of dug in on this at this point since you have money committed but you may want to read this guy's stuff - he's pretty thorough....

Ahan Vashi profile picture
Teladoc was a part of BTM's Weekly top ideas (74th edition) and it is up 7% since the recommendation. There are ten more companies on this list, which is available exclusively at: seekingalpha.com/...
Flex68 profile picture
Interesting juxtaposition between this article, and another recent article "TDOC Needs A Wellness Check."

Guess it depends on the glasses you're wearing, your belief on how dramatically the SP increased (and decreased), and what TDOC has to offer.

As a potential investor, I am not seeing the consolidation that would motivate me to pull the trigger.......
Dead walking company? Shares bear since edge.
AlexFun86 profile picture
Very sad to see TDOC enterprise fall below what they paid for Livongo :(
I had bought this at ~180, there were some (known here) authors "very bullish" (I suppose now at ~120 they are "monumentally bullish").
But I decided that was one of my (few) mistakes, and I sold ~150 with a small loss, because of: lack of moat; strong competitors; bleeding cash flow from operations; debt (and the negatives only growing stronger)
The only interesting thing I see is indeed the valuation, but no way the numbers in this article (25% growing FCF for 10 years "conservative estimate"!!)... I believe Morningstar's FV = 210 much more appropriate...however, I decided to take some time to research and switched to some other things much more robust / interesting
Good luck anyway!
Murad Shawar profile picture
@antoncretu once it goes to 50$ Ill be sure to scoop some
Buy TDOC below 110
It will drop before it comes back
NextLevelTrading profile picture
TDOC will be 200+ in 2022.

Like the article says, way undervalued.
I’m a big Tdoc bull ever since Cathie and her team discussed what they see in telemedicine and how future healthcare will require this to drive down the insane costs. I could care less about stock price right now, I just keep accumulating. Would rather buy a great company with a falling stock price then chase a decent company with rising stock price. Becuase the good ones always turn around - and this turnaround will be rapid. I honestly think investors know that the big revenue jumps won’t happen until next year when their new contracts start so they have time to keep shorting it until then. Anyway, very long teladoc and continue to accumulate huge while the stocks on sale.
@Tdog88 yes , it’s a great story . Not sure why coo left
@Tdog88 Exactly. Buying something no one wants, and then holding it until it shines so brightly that everyone wants it. Buying low and selling high.
@heung c-suite executives leave companies everyday. I think this is irrelevant.
Great analysis. I totally agree.
Jay Unni profile picture
An FCF margin of 35% seems unrealistic. Very few businesses would achieve margins like this. What leads you to believe margins would be that high?
stock realist profile picture
So if tdoc going bankrupt "can't be far from reality" then that means tdoc is headed toward bankruptcy !
@stock realist going bankrupt would be quite the feat, given that they have nearly 800m of cash on hand and are ebita net positive adjusting for SBC.
luckydiet profile picture
Great peace, and fully agree. Am holding TDOC as a former LIVONGO holder. At the moment bleeding, average price far higher than current price. But truly believe this will flourish. Considering to add more, but running out of cash and TDOC already 9% of portfolio.
I like buying things that nobody wants. Great analysis.
@MsMsmak I have a turd that I'll sell for $50. want it?
jorisderooij profile picture
@jeffk100 no thanks you can keep that uber share
@jeffk100 Apparently, you don't understand investing.
I'm bleeding with this one. Hope you're right.
You can do all the analysis in the world. But I think it all comes down to this:

sorentostudio profile picture
Can doximity be a competitor to Teladoc?
@sorentostudio yes….major. Big enough TAM though that multiple providers will succeed
And how much of that future revenue will go to executive compensation? If history is any guide, about half of it. Truly obscene. Ripple of Greed.

Once very bullish in the Livongo days and initially optimistic about the merger, became disenchanted with outrageous executive payouts revealed months after the merger. SBC at 50% of revenue is a bit much. Golden blimps. Vision is not enough, integrity and fiduciary commitment to all shareholders is essential.

If they want to get rich, the execs should invest their own cash, buy shares on the open market, and do a good job of growing the company. Manager pay should be modest. Follow the BRKA model.
Michael Maiello profile picture
@addedupon At this point, the SBC compensation, which is expected to take 2 years to fully roll off, is frustrating as it's the largest portion of the reported GAAP losses and obscures TDOC's profitability.

That said, TDOC really needed LVGO to differentiate itself from competitors. LVGO is the reason that TDOC has such potential and won't just have to engage in a race to the bottom on prices with competitors like Doximity, Amwell and whatever Amazon and Wal-Mart cook up.

Given that it was a vital acquisition and that LVGO had a bright future as a standalone company, the LVGO executives had every right to demand compensation before moving on to other ventures. They rightly demanded an acceleration of what they saw as their future returns had they told TDOC to pound sand. Heck, as a LVGO holder, I thought the premium paid was too low for a cash-stock deal!
@Michael Maiello Agree that the premium to the LVGO shareholders was far too low. The payoff to the Livongo execs to close the deal was obscenely excessive, revealing the disregard those execs had for their fiduciary responsibilities to all LVGO shareholders.

The buyout price should have been significantly higher, the payoff to Livongo execs MUCH lower. Surprising lack of integrity, IMO.

I was among those who was willing to live with the low buyout price, assuming it would return to LVGO in TDOC performance, until i later discovered that 50% of 2020 combined corporate revenue went to SBC rather than to the advantage of all shareholders.
my second worst performer of the year. Down -25% here...still bleeding, sub 100 possible?
@cox87 definitely. That said- Still a good entry to accumulate now. 10x sales for this business model, in this vertical, is very fair
@cox87 Might be a great time to back up the truck though. Out of favor doesn't mean out of business.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.