Why Teladoc shares fell sharply on Thursday

What happened

Actions of the telehealth specialist Teladoc Health (NYSE: TDOC) took a hit on Thursday. The company’s shares fell as much as 9.9%, but were down 8% at the time of the market close.

The stock’s drop came as the company released guidance as part of its Investor Day. While the metrics provided were broadly in line (and in some cases even better) than current analysts’ estimates, investors may have been hoping for a brighter outlook from management.

Image source: Getty Images.

So what

Teladoc is forecasting $ 2.6 billion in revenue for fiscal 2022, up from analysts’ forecast of just over $ 2 billion in revenue for that fiscal year. That forecast was slightly higher than analysts’ average forecast for revenue of $ 2.58 billion in fiscal 2022. Longer term, the company said it expects revenue FY2024 exceed $ 4 billion, resulting in a compound average growth rate of 25-30%.

The point in the presentation that may have disappointed investors was management’s view on revenue of $ 2015 to $ 2.025 billion for fiscal 2021. The lower end of this range is below Average analyst forecast for fiscal year 2021 revenue of $ 2.02 billion.

Now what

Investors shouldn’t dwell too much on what may appear to be disappointing forecasts compared to analysts’ estimates. Overall, it’s good news to hear that management expects significant growth over the next several years. This suggests the company is confident in its long-term strategy to move forward in monetizing the $ 261 billion addressable market it is targeting in the United States.

Plus, it’s not as if Teladoc has lowered its revenue forecast for the entire year. The forecast is in line with what it was guiding just a few weeks ago.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

About Virginia Ahn

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