7 Reasons Why This Teladoc Health Analyst Is Turning Bullish

Teladoc Health Inc’s (NYSE: TDOC) pro-forma revenue growth and synergy targets appear achievable, according to Credit Suisse.

The Teladoc Health Analyst: Jailendra Singh upgraded Teladoc Health from Neutral to Outperform with a price target lifted from $225 to $249. 

The Teladoc Health Takeaways: The company formed by the merger of Teladoc Health and Livongo Health Inc (NASDAQ: LVGO) could generate annual revenue of around $5 billion, with annual EBITDA of about $1.1 billion in 2025, Singh said in the upgrade note.

The analyst named seven factors that are driving the upgrade:  

• The combination of Teladoc and Livongo creates a health giant that is likely to beat the competition in virtual care, remote patient monitoring and chronic care management.
• Singh expressed optimism regarding Livongo Health’s business model, offerings and growth prospects.
• The merger is strategic, as it enables Teladoc to “generate incremental revenues from cross-selling the chronic care and disease management programs” to its 70-million-member base as well as “increase the stickiness of its employment/payer clients,” the analyst said. 
• The compounded annual growth rate for the combined entity’s revenue is estimated at 30-40% over the next three years.
• Upside exists to the estimated revenue synergy estimate of $500 million for 2025.
• The cross-selling opportunity is underappreciated.
• The valuations implied by the price target are “rich but justified,” Singh said. 

TDOC, LVGO Price Action: Shares of Teladoc Health were trading 7.59% higher to $201.73 at last check Monday. Livongo shares were 7.89% higher at $127.68.

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Benzinga's Top Upgrades, Downgrades For August 17, 2020