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Below is a brief excerpt from a complementary research note written by our Healthcare Team of Tom Tobin, William McMahon, and Justin Venneri. We are pleased to announce our new Sector Pro Product Health Care Pro. Click HERE to learn more. |
TDOC
The initial reaction to the earnings release was -8% AH. As the call began and through the Q&A, shares recovered to -3%.
We think there are a few cross currents and investor concerns lurking, and there is also a clear deceleration in the fundamental momentum. Whether it’s factors and quants or worried narratives, we’re not sure, but TDOC put up a very strong result in a challenging environment.
On the quant side, revenue momentum has been decelerating since August at TDOC and a host of other names, as we’ve highlighted numerous times on The Call Plus and in our sector coverage.
Simultaneously, the failure to add additional stimulus and rising COVID19 case rate is providing some negative fundamental backdrop for TDOC.
At the same time, COVID-19 resurgence will push more doctor visits online, and this isn’t April 2020 (most physicians have at least adopted or adapted to one system).
This third wave is unlikely to be as robust in telehealth visits as the first was for TDOC, who for a long time was one of only a few offerings – i.e., scarce and special. Now, they are one of many with both systemic and niche players coming on strong. All that said, the beat and raise was impressive, as was their commitment to 30-40% growth in 2021.
Here’s how the Microquad setup looked for TDOC as of 10/26 (on a pure quant basis, MQ3 is still long, albeit a smaller allocation):
