This week’s stock analysis is Teladoc Health Inc. (TDOC).
Teladoc Health, Inc. is a multinational telemedicine and virtual healthcare company. Primary services include telehealth, medical opinions, A.I. and analytics, telehealth devices and licensable platform services. Teladoc Health uses telephone and videoconferencing software as well as mobile apps to provide on-demand remote medical care. Teladoc is known as the first and largest telemedicine company. It launched in 2002 and has acquired companies such as BetterHelp in 2015, Best Doctors in 2017, and Advance Medical in 2018. It trades on the NYSE and in 2020 was active in 175 countries and served around 27 million members.
Teladoc Health divides its services into six categories: platform and program services, guidance and support, expert medical services, mental health services, telehealth, and integrated virtual care. As a software company, the company primarily uses telephone and videoconferencing software to provide on-demand remote medical care, with patients able to log on to the service at any time and be connected with a board-certified, state-licensed physician within several minutes.
29 Wall Street analysts have issued ratings and price targets for Teladoc Health in the last 12 months. Their average twelve-month price target is $241.45, predicting that the stock has a possible upside of 40.90%. The high price target for TDOC is $300.00 and the low-price target for TDOC is $162.00. There are currently 11 hold ratings and 18 buy ratings for the stock, resulting in a consensus rating of “Buy.” This wide divergence of opinion and undervalued nature is something that POWER TRADERS get very enthusiastic about. This is a stock that can offer both swing trading potential as well as long term value when all the analytical factors line up.
In 2020, Teladoc grew its revenue by 98% year over year to $1.093 billion. The firm’s paid subscriber count also increased by 41% year over year to 51.8 million. What is surprising to many analysts is that with COVID-19 and the lockdown many anticipated the stock to benefit the way that ZOOM did in teleconferencing for employees. Telehealth seems here to stay in some capacity. Before COVID-19 occurred, only 11% of Americans would seek medical care over the internet. But that number has now risen to over 76%.
Teladoc is looking to become a one-stop platform for all virtual health needs.
Analysts expect more than 31% revenue growth this year and over 25% revenue growth in 2022. The stock price action has been disappointing for shareholders over the last year. TDOC has underperformed the S&P 500 by 55% and the NASDAQ by over 63%.
Last year the company acquired Livongo Health for $18.5 billion and by doing so added chronic disease treatment to its platform. What is equally impressive is that over 40% of Fortune 500 companies currently use Teladoc. Over 50 healthcare plans around the country also cover its service.
The company has enormous potential, a phenomenal narrative to scale its business outside the U.S. and huge international demand as it currently operates and delivers telehealth services in over 175 countries.
Common Sense Metrics
Let’s start our analysis with the commonsense metrics. Over the last 52 weeks TDOC has traded as high as $308 and as low as $129.74. This tells us that the annual trading range has been $178.26. The average weekly trading range has been $3.42. These values provide baseline metrics which we look to dramatically outperform when we apply artificial intelligence and machine learning to our decision-making process. This value of $3.42 equates to roughly 1.9% and we can often look at rallies and pullbacks as a multiple of this number.
When we study the charts, we start by analyzing where the market is in relationship to its 52-week high and low. Experience tells us that assets that successfully breach their 52-week highs on strong momentum tend to move higher, and vice-versa. The following 1-year TDOC chart shows the most recent 52 week high and low boundaries.
What is fascinating about the chart is that by simply eyeballing the 52-week chart we can see that this stock tends to fall much, much faster than it rises. Over the last year TDOC has had 4 very large retracements.
On August 4th, – August 12th the stock lost 27.77% in 7 days.
On October 28th – November 10th the stock lost 26.56% in 10 days.
On February 16th, 2021, through March 8th, 2021, the stock lost 42.41% in 15 days.
On April 27th, 2021, through May 13th, 2021, the stock lost 31.64% in 13 days.
It had its largest rally of 79% from November 11, 2020, through February 16, 2021, which amounted to 66 days.
The lesson to be learned here is that the stock tends to fall quickly and rally slowly. Pullbacks of 25% to 30% or larger from peak to trough should make you look to place this firmly on your radar to explore a trading opportunity.
There is tremendous power in being aware of an asset when it is trading at 52-week highs. At these points we pay particularly close attention to VantagePoint’s A.I. forecast.
What makes TDOC unique is Wall Street Analysts think the stock has 40% upside potential from current levels but in reality, the stock has recently bounced off its yearly lows within the past 6 weeks following its largest annual decline of 57%.
The Vantagepoint A.I. Analysis
Whenever we look at an asset forecast, we always are comparing what the stock has done, to the artificial intelligence, which is computing its forecast based upon a proprietary intermarket analysis of the most closely correlated assets as well as a neural network computation.
The key to the VantagePoint analysis is the predictive blue line. The slope and general direction of the blue line determines the medium forecast for the market.
The VantagePoint Software has three separate modules which create a forecast for a Power Trader. They are the predictive blue line, the Neural Net, and the Intermarket Analysis.
The predictive blue line also acts as value zone where in uptrends traders may try to purchase the asset at or below the blue line. Power traders use the predictive blue line in helping to determine both the value zone as well as the trend direction.
To understand and appreciate how powerful this indicator is, we’ll remove the daily price bars on the chart.
- The slope of the predictive blue line determines the short-term trend. On the following graphic, you would want to look for opportunities to buy when the slope of the blue line is going up.
- When the slope of the blue line is going sideways you would be anticipating sideways prices.
- Likewise, when the slope of the blue line is going down you would be anticipating lower prices.
Here is the price chart of TDOC between 4/27/21 and 6/29/21:
Observe “when” the SLOPE of the predictive blue line started moving higher and how price behaved.
Here is the same chart with the accompanying daily price bars. As you look through this chart study how
- Power Traders always try to look for opportunities to purchase the asset at or below the predictive blue line, as that is the IDEAL VALUE zone for traders.
- Power Traders always try to look for opportunities to sell the asset at or above the predictive blue line, as that is the IDEAL VALUE zone for traders.
At the bottom of the chart is the Neural Network Indicator which predicts future short-term strength and/or weakness in the market. When the Neural Net Indicator is green it communicates strength. When the Neural Net is red it is forecasting short term weakness in the market.
We advocate that Power Traders cross reference the chart with the predictive blue line and neural network indicator to create optimal entry and exit points.
Observe how traders who acted upon only these two indicators are banking profits excess of 21% in the last 27 trading sessions.
Power Traders are always looking to apply both the neural network and A.I. to the markets to find statistically sound trading opportunities.
Fine Tuning Entries and Exits of TeleDoc (TDOC)
One of the powerful features in the VantagePoint Software which Power Traders use on a daily basis is the Price Range prediction forecast.
This forecast is what permits Power Traders to truly fine tune their entries and exits into the market.
At 6:30pm after the market close the software updates and all of the price predictions change based upon what the machine learning, A.I., neural networks, and intermarket analysis anticipate moving forward.
Here is the price chart of TDOC during the most recent runup featuring the Daily Price Range forecast with the NeuralNet Index at the bottom of the chart. Day traders who are looking for short term swings in the markets focus on the daily price ranges to place their entry and exit orders.
By utilizing both tools simultaneously, Power Traders can locate precision entries and exits with high probabilities of success and can exploit short term swing trading opportunities.
When buying, many Power Traders often use a price level below the predictive low price to place their protective sell stops in the market in case a sudden reversal was to occur. When selling, many Power Traders use a price level above the predictive high to place their protective sell stops.
Traders use these VantagePoint tools either independently or together to find great trading opportunities. This is the power at your fingertips when you use artificial intelligence to do your trend analysis. The slopes of the price channels above clearly delineate the trends.
Intermarket Analysis for TeleDoc (TDOC)
We live in a global marketplace. Everything is interconnected. The billion-dollar question for traders is always what are the key drivers of price for the underlying asset that I am trading?
What makes VantagePoint unique and distinct when compared to all other analytical tools is its patented and proprietary intermarket analysis.
Intermarket analysis is a method of analyzing markets by examining the correlations between different asset classes. In other words, what happens in one market could, and probably does, affect other markets, so a study of the relationship(s) is often very helpful to a trader.
There is great value to be had in studying and understanding the key drivers of TDOC’s price action.
Small changes in Interest rates, Crude Oil Prices, and the Volatility of the dollar amongst thousands of other variables affect the decisions companies must make to survive in these very challenging times. Trying to determine what these factors are is one of the huge problems facing investors and traders.
These factors are all displayed from a standpoint of statistical correlations which show the strongest interconnectedness of prices.
The blue rectangles represent the US stocks most statistically correlated to TDOC’s price action.
The green rectangles represent the ETF’s most statistically correlated to TDOC’s price action.
The red rectangles represent the futures contracts most statistically correlated to TDOC’s price action. Instead of looking at financial markets or asset classes on an individual basis, intermarket analysis looks at several strongly correlated markets, or asset classes, such as other stocks, currencies, ETFs, and commodities. This type of analysis expands on
simply looking at each individual market or asset in isolation by also looking at other markets or assets that have a strong relationship to the market or asset being considered. The VantagePoint software analyzes the top 31 drivers of an assets price. This analysis will often show ETF’s which are big owners of the underlying asset, but it will also uncover other markets which are driving the trend you are analyzing. Traders often find other blossoming opportunities when engaging in Intermarket Analysis.
Our Trading Suggestion for TDOC
We approach our analysis not from a fundamental valuation perspective but from a pure trader’s viewpoint. Telehealth is a huge growth industry. However, as we have seen the price action of TDOC it is prone to a great deal of volatility. When we look at a stock, we evaluate it strictly from a technical perspective based upon the artificial intelligence forecast.
The potential and growth opportunity in international telehealth is massive. This fundamental story is the narrative driving TDOC’s price action.
By traditional valuation methods TDOC is undervalued. Currently, the trend is clearly UP. Power Traders, who are in at lower prices, have moved their protective sell stops up to the bottom of the trading channel as a defensive measure.
The consensus of analysts’ opinions shows that TDOC is fairly valued around $241. With the stock currently trading around $172 we think it is a good swing trading candidate. TDOC has massive upside potential but as we have seen from the yearly chart it also has the capacity to fall over 25% in a matter of days. Based upon this reality the only way we can in good conscience look to position ourselves for the long term is to swing trade the asset but leave profits from the short-term trade in the stock for the long term.
For example, let’s say you trade $10,000 worth of TDOC. It grows to $11,000 shortly thereafter. You remove your original principal of $10,00 and leave the $1,000 in the stock looking to stay positioned for the long term with the profits you generate on the swing trade. With volatile assets which have huge potential this is how we can minimize exposure over the long term by exploiting our short-term strength.
TDOC is a great swing trading stock. We have it firmly on the radar and look for opportunities to buy weakness with stops below the lows of the current A.I. daily forecast.
Our advice: Follow the A.I. trend analysis and practice good money management on all your trades.
TDOC will need to break to new 52-week highs to confirm to long term value investors that it is the real deal. We have had it on our radar many times over the past year and will continue to monitor it for solid trading opportunities. The narrative driving TDOC is very powerful. Telehealth is a huge growth industry domestically and internationally.
The Vantagepoint A.I. forecast has been very accurate on TDOC. We think it will present us with multiple opportunities over the remainder of 2021.
Let’s Be Careful Out There!
Remember, It’s Not Magic.
It’s Machine Learning.
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