the part of Health Teladoc (WKN: A14VPK) continues to trade fairly low. With a price per share of approximately 63 euros, the records of recent months and years are a thing of the past. Ultimately, the positive effect of the corona pandemic has been discounted. But not operationally, which may reveal an exciting opportunity.
Does that make Teladoc Health the million dollar opportunity you should bet on now? Possible. But there are certain factors that must be considered. After all, opportunities and risks go hand in hand with every investment.
Teladoc Health: Market for the Million Euro Opportunity?
Teladoc Health operates in the field of telemedicine, a market that is still relatively small. Possibly even smaller than expected at the moment, creating additional burden. Anyway, for the third quarter of 2021, management has put the cards on the table and showed a $5.5 billion US market that McKinnsey saw at the time. With $2 billion in revenue, the digital healthcare player is already well positioned in the US.
The key question is: how big can telemedicine be in the US? And a later question is of course also: What is the position of Teladoc Health in this market? In any case, the management itself sees a potential market of US$261 billion in a total market of US$3.8 trillion for health services in the US. This shows that there may still be enough for an opportunity. of one million euros. Especially since the market capitalization has fallen to a low of 11 billion US dollars.
Competition and ecosystem
Most important, however, is Teladoc Health’s market position. Competitors are a dime a dozen. Amazon is also dedicated to this area Microsoft they are said to be ambitious. At the international level there are actors such as 111 or other small digital healthcare companies. Of course, that can make this small market more strict.
However, the management of Teladoc Health decided to take a qualitative step by acquiring Livongo Health. Health data should play a bigger role. This opens the way for data processing or storage in health care. Certainly other relevant markets. Measured by price, the purchase was higher than the affiliated company’s current stock market value. Pretty unhappy, no doubt.
However, we recognize that the company management attaches great importance to the ecosystem. The vision of developing an offer in the future that can accompany patients in all areas related to health through telemedicine also reveals more possibilities. But the company is not alone here.
Teladoc Health: Valuation and Growth
Teladoc Health may be a million dollar opportunity based on your valuation. A market cap of around 11 and a price-to-sales ratio of 5.5 is pretty cheap. Especially for a leader in digital health services, as long as this investment thesis works. Growth is expected to be 25-30% per year for the next several years. It would be crucial for management to grow profitably.
Without a doubt, Teladoc Health really does have a lot to prove. Anyone who believes in telemedicine and this player can bet on a million dollar opportunity with a high stake. But don’t forget: the market and the competition involve certain risks.
The article Teladoc Health: The Million Dollar Opportunity? first appeared in The Motley Fool Germany.
Vincent owns shares of Teladoc Health. John Mackey, CEO of Amazon subsidiary Whole Foods Market, is a member of The Motley Fool’s board of directors. The Motley Fool owns stock and recommends Amazon, Microsoft, and Teladoc Health.
Motley Fool Germany 2022