Prior to the coronavirus pandemic, Teladoc (NYSE:TDOC) was growing rapidly. The global health crisis accelerated that growth.
However, pandemic benefits turned to a detriment for the telehealth giant, and the stock got painted with the dreaded “pandemic play” brush, prompting some unknowing investors to think COVID-19 was essential to the company’s fortunes. That’s not the case, but that goes a long way toward explaining why the stock has struggled for more than a year.
The good news is some analysts believe Teladoc is primed for a rebound.
“We think healthcare access is moving more toward digital interactions, and TDOC’s broad suite of services addresses more touchpoints than any other provider, in our view. While COVID created a short-term upswing in awareness and utilization, we think it also accelerated the longer-term shift to broad-based adoption,” said Guggenheim analyst Sandy Draper in a recent note to clients.
Draper has a $96 price target on Teladoc, implying an upside of roughly 40% from the April 7 close. Should that forecast prove accurate, an array of exchange traded funds would benefit including several in the ARK Investment Management stable.
For example, Teladoc, as of April 7, is the second-largest holding in the ARK Genomic Revolution Multi-Sector Fund (CBOE: ARKG) at a weight of 7.35%. The ARK Innovation Fund (NYSEArca: ARKK), ARK’s flagship ETF, allocates 6.39% of its weight to Teladoc, making the stock the fund’s fourth-largest component.
“We believe that growth in revenue per customer will offset slowing membership growth, and TDOC will be able to deliver 25-30% revenue growth through 2024 and 20+% growth longer term,” adds Guggenheim’s Draper.
The telehealth giant also resides in the ARK Web x.0 ETF (NYSEArca: ARKW), accounting for 5.41% of that ETF while making it ARKW’s seventh-largest holding.
Perhaps surprisingly, Teladoc is the number 11 holding in the ARK Fintech Innovation ETF (ARKF) at a weight of 4.12%. That means that of ARK’s six actively managed ETFs, only the ARK Autonomous Technology & Robotics ETF (CBOE: ARKQ) and the ARK Space Exploration ETF (ARKX) don’t have positions in Teladoc. Still, ARK is the largest institutional owner of Teladoc shares, as of the end of 2021.
“Teladoc saw a surge in interest — and in its stock price — during the pandemic as in-person doctor visits were sharply curtailed,” reports Jesse Pound for CNBC. “Guggenheim said, however, that the company should prove to be successful even with slowing user growth.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.