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April 14, 2021
Teladoc Health stock rose Tuesday as The Food and Drug Administration moved to temporarily halt the rollout of Johnson & Johnson's COVID-19 vaccine.
And, “Weekly Options Members” managed to gain a potential profit of 249% in 24 hours.
More upwards movement is expected, and for those that have exited the trade, a new trade may be considered.
The Actual Recommended Trade…..
** OPTION TRADE: Buy TDOC APR 23 2021 185.000 CALLS at approximately $4.80.
(actually bought for $3.15)
The Profit Explained…..
Weekly Options Members” entered a Teladoc Health trade on Monday, April 12, 2021 for $3.15 at 9:53am, shortly after the market opened.
The stock price meandered throughout Monday trading but still finished higher than the buy price.
By 10:00am Tuesday, April 13, 2021 the price of the option soared to $11.00 – a nice profit of 249%.
TOTAL PROFIT FOR THE DAYS TRADING IS 249%
The FDA said it would ask states to pause their administration of J&J's drug while it reviews data involving six reported U.S. cases of a "rare and severe type of blood clot in individuals after receiving the vaccine. The regulatory agency noted that these incidents were "extremely rare," and it was recommending a pause in the use of J&J's vaccine "out of an abundance of caution."
Meanwhile, this situation drove investors to seek shelter in stocks, such as Teladoc Health that has held up well during the pandemic.
Investors rotated out of stocks poised to profit from a post-pandemic economic recovery, and into companies, such as Teladoc Health, which benefits from a slower roll-out schedule.
Why The Trade Recommendation On Teladoc Health?
The stock market had an unprecedented year in 2020, putting up better-than-average gains while facing down a global pandemic. The S&P 500 added more than 16% last year, but the tech-heavy NASDAQ was the big winner, soaring nearly 44%. Some of the biggest technological trends came clearly into focus last year, as streaming video, cloud computing, and telemedicine gained legions of converts.
So far this year, however, investors have been buying stocks that they believed would benefit from the recovery, rotating out of many tech stocks in the process. This has left plenty of bargains among these high-growth stocks in categories that combine best-in-class products and services, huge tailwinds, and large addressable markets.
The future of medicine came into focus last year with the accelerated adoption of virtual care, telemedicine, and connected healthcare devices. The demand for app-based doctor visits soared. That put industry-leading provider Teladoc Health in the pole position. Now that an end to the pandemic is in sight, some investors believe the vast majority of patients will forego the ease and convenience of digital appointments in favor of a return to in-person visits. The evidence simply doesn't support that view.
Teladoc shares soared last year, gaining 139%.
The Major Catalysts for This Trade.....
1. Virtual Care.....
Patients are embracing virtual care, and recent studies suggest that the majority will continue to do so. A survey of 2,700 patients revealed that 90% found the quality of care received during app-based video visits with their physician was as good, if not better than regular office visits, according to research conducted by Accenture. Some 60% of respondents said they planned to use telehealth solutions with even greater frequency in the future to communicate with their healthcare providers and manage chronic conditions.
It's considerably more convenient for patients and allows physicians to better keep tabs on potentially high-risk patients. Virtual visits are also billed at a lower rate than office visits, which makes telehealth an instant hit with health insurance companies.
Teladoc's results paint a compelling picture. Revenue grew 98% in 2020, while total patient visits surged 206%. While the bottom-line results were muddled by acquisition-related costs and income tax complications, the company's adjusted EBITDA increased 298%.
, the company says its revenue will increase at least 78% in 2021 to $1.95 billion and its adjusted EBITDA will at least double to $255 million. That values Teladoc shares at about 14 times expected 2021 sales -- not bad for a high-growth name in the health tech space.
3. Livongo Health.....
The recent acquisition of Livongo Health puts Teladoc at the forefront of another booming trend: the use of connected devices to manage chronic conditions. With more than 147 million patients with at least one chronic condition, dealing with them regularly can be time-consuming and expensive. By providing timely reminders and hints via connected devices and apps, patients enjoy an improved quality of life. The process also reduces the cost of healthcare, which benefits insurers, creating a true win-win.
The combined addressable market of Teladoc and Livongo tops out at more than $64 billion. When taken in the context of the $1.09 billion in revenue Teladoc delivered in 2020, it illustrates the long runway for growth ahead.
The Pullback Provides Opportunity.....
Teladoc has lost close to 40% of its value in less than two months, primarily as a result of the U.S. successfully administering over 167 million coronavirus vaccines as of April 5. With nearly a quarter of the adult population fully vaccinated, and Amazon announcing a nationwide expansion of its virtual-care platform, there's been some concern about where Teladoc goes from here.
However, Wall Street says it will go up. With a consensus price target of almost $260, Teladoc offers implied upside of 43% over the next year.
Piper Sandler analyst wrote that he would be a buyer of the stock “on recent weakness.”
Virtual care remains only in its early innings. Consulting firm McKinsey predicts that the U.S. virtual-care market could reach $250 billion per year after the pandemic is over. Teladoc's opportunities aren't just limited to the U.S., either.
Teladoc's head start, commanding market presence (its customers currently include over 40% of the Fortune 500), and scope of products and services give the company solid competitive advantages.
Teladoc Health is very likely to keep the momentum going. With a revenue retention rate of over 90%, a diverse array of virtual services, and an expanding subscriber base, Teladoc's growth is extremely sustainable. Therefore, it should have no problem meeting -- or even surpassing -- its revenue guidance for a 30% to 40% increase per year through 2023.
This year Teladoc Health expects to increase its revenue and EBITDA to $2 billion and $265 million, respectively. What's more, the company has enormous potential to scale its business outside the U.S. It currently operates in over 175 countries.
Teladoc Health is looking to become a one-stop platform for all virtual health needs.
Last year the company added chronic disease treatment to its platform with its $18.5 billion acquisition of Livongo Health, which finalized in October. In Q3 2020, it had 540,000 members enrolled in this segment. At the end of the fiscal year, that number has already risen to 600,000.
Over 40% of Fortune 500 companies currently use Teladoc. Over 50 healthcare plans around the country also cover its service. It should be no surprise that the company is earning new interest from business' savviest players, as it invests up to 16% of its sales each year into improving its platform.
Will Teladoc Health Stock Price Continue To Climb?
Will We Recommend Another Trade On Teladoc Health?
What Other Trades Are We Anticipating?
Do You Wish To Be Part Of This Action?
For answers, join us here at Weekly Options USA, and get the full details on the next trade.
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