Teladoc Health Inc.(NYSE: TDOC) , a provider of virtual healthcare services reported their second quarter fiscal 2020 earnings that beat top line analyst expectations, and raised third and full-year guidance, but bottom line perfomance came in short.
The stock is down about 2.54% in after-hours trading as investors are displeased with the mixed results.
The company generated $241M of revenue, above street consensus by 9.3%, and 85% higher year-over-year.
This was well in line with management’s revenue expectations for the quarter of being between $215M-$225M.
Teladoc’s subscription access revenue rose by 63.8% year-over-year to $182.17M, while visit fee revenue was up by 209% compared to last year.
Earnings per share however came in at ($0.34)/sh, 57% lower than analyst expectations of ($0.22). This was also below management’s expected range of ($0.28)/sh to ($0.23)/sh.
The company’s EBITDA for the reported quarter was ($5.04)M, which was also below analyst target of $22.2M, and below management’s expectations of EBITDA being between ($1)M to $3M.
Regardless of missing the latter analyst and management targets, Teladoc’s expansive revenue growth presents a buying opportunity when considering the reasons discussed in the rest of this article.
Fundamental Deep Dive
Teladoc, and Zoom, which are the top two video communication service providers presented on the following chart, has enjoyed the most gains amongst other tech companies during the pandemic fuelled tech rally.
However in terms of value, Teladoc’s share price is trading at 19.97X price to sales multiple, which is the lowest according to following illustration.
As depicted, the PS multiple of both Zscaler, and Atlassian are higher than Teladoc’s. This seems questionable given that the quarterly year-over-year revenue growth for these two companies is lower than Teladoc’s 40.6% growth, as shown below.
Therefore, we believe that this presents a buying opportunity also when considering the fact that analyst estimates for forward EBITDA are much higher than the company’s current EBITDA performance.
Additionally, management’s higher revenue guidance for the third quarter being between $275M to $285M, higher EPS expected range of ($0.35) to ($0.30), and higher EBITDA estimated range of ($3) to $1M, suggests that the company is capable of gaining more value in the near term.
As a result in cumulative to these facts, it is expected that Teladoc could see more growth in its share price at least till the end of the company’s current fiscal year.
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