It has been another mixed session for many growth stocks as earnings season continues. For investors in Teladoc (NYSE:TDOC) stock, this latest round of earnings is one to forget. Shares of TDOC stock plunged around 25% today following the company’s earnings report, which included weaker-than-expected forward revenue guidance.
Now, Teladoc didn’t really report disastrous numbers. The company’s loss actually came in better than expected at 17 cents versus consensus estimates for a 22-cent loss. However, the company’s top-line number was light (around $10 million below the $670 million projected number). Teladoc also suggested that revenue may actually come in between $630 million and $645 million for the coming quarter, or a sequential decline. Wall Street had factored in a sequential decline, but not to this degree, with the average revenue target above the upper end of this range.
On this news, Piper Sandler lowered its price target on TDOC stock to $25 from $30 per share and investors aren’t liking what they’re seeing. Let’s dive into what Teladoc reported and what to make of today’s downgrade and price action.
TDOC Stock Sinks on Weak Guidance, Analyst Downgrade
When a company reports earnings and guidance numbers that are well off of consensus, analysts are bound to come out with immediate revisions. Indeed, today’s price decline in TDOC stock really tells investors all they need to know about how analysts are reacting to this report. In fact, the $5 per share target price reduction from Piper Sandler may prove to be light, given that the stock is down by more than $5 per share following earnings.
Teladoc is continuing to burn through cash in a bid to gain market share in the telemedicine segment. Unfortunately for many investors who expected profitability by now, it appears we’ll have to wait some time to see margins come into the black.
In the meantime, investors are being met with lowered revenue expectations and one could argue it’s the top-line growth numbers that have been holding TDOC stock’s valuation together. Accordingly, such a mix really provides a negative outlook for shares — and has clearly led to the downside pressure we’re seeing today.
I’m not surprised to see this price action for TDOC stock on the heels of the report and recent downgrade. I also wouldn’t buy this stock on the dip, considering there could be much more downside where this came from. Until Teladoc can show a path to profitability or accelerating revenue growth, this is a stock that will likely lag the market from here.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
