Hold On Teladoc Bulls: Stifel Is Cautious Amid Business Model Uncertainty

On Wednesday, Stifel issued its "Morning Research Summary" and initiated Coverage on Teladoc Inc (NYSE: TDOC). Currently, Stifel rates Teladoc as Hold with no attached price target listed.

Stifel views telemedicine as an attractive investment opportunity; however, Stifel analyst Steven Rubis wrote, "While we respect management and believe Teladoc faces a significant growth runway, we believe there are several risk factors that outweigh the positives [...] We believe we need to seek greater clarity around our primary concerns and more attractive valuation levels before potentially becoming constructive, all else being equal."

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Telemedicine And Teladoc

Stifel highlighted five key risks that make the firm cautious on Teladoc:

• 1. Teladoc's business model may be more costly than an in-person visit.
• 2. There is a high amount of competition in the telemedicine sector.
• 3. The market for visits may be more limited than Teladoc's management has led investors to believe.
• 4. There are concerns over both revenue and revenue growth and poor utilization rates.
• 5. Sky-high earnings expectations with the majority of price targets being double the current share price>

Overall, while telemedicine represents a potentially attractive investment opportunity, concerns over Teladoc's business model, increased competition and a limited market of users makes Stifel question the strength of Teladoc going forward.

With that in mind, the firm says that they cannot justify valuing Teladoc higher than competitors Medidata Solutions Inc (NASDAQ: MDSO) and athenahealth, Inc (NASDAQ: ATHN).

Recent Trading Activity

Athenahealth was recently seen trading down 0.78 percent at $161.95.

Medidata was recently seen trading up 0.31 percent at $48.20.

Teladoc was recently seen trading up 0.26 percent at $19.55.

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