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The Ratings Game: Teladoc stock downgraded as analysts lament ‘underwhelming execution’ and risks to guidance

Two more former bulls on Teladoc Health Inc.’s stock jumped ship Tuesday, warning of various challenges for the telemedicine company.

With the latest downgrades from Berenberg Capital Markets and Cowen & Co., just four of the 28 analysts tracked by FactSet who cover Teladoc’s stock

now have bullish ratings. As recently as March, 17 of 30 analysts had buy-equivalent ratings on the shares.

Teladoc’s stock was off 1.7% in Tuesday morning trading.

“We believe Teladoc’s long-term success is tied to its ability to deliver a fully integrated whole-person care model, so as not to rely as heavily on just the behavioral health business, a market we view to be commoditized,” wrote Berenberg’s Dev Weerasuriya, who downgraded the stock to hold from buy. “However, given slow execution in fully integrating the care model, and pressure from the current economic environment, this year’s benefits selling season is likely to pass without meaningful movement on this front.”

Weerasuriya wrote of Teladoc’s “underwhelming execution and lack of clear catalysts over the next 12 months.”

His note comes several days after the company reported second-quarter results and maintained its prior outlook for revenue and earnings before interest, taxes, depreciation, and amortization (Ebitda), though executives said that they expected results to fall toward the low end of the existing ranges.

“We believe mgmt’s decision not to lower 2022 guidance post-2Q leaves estimates at risk for the year,” wrote Charles Rhyee of Cowen, who cut his rating to market perform from outperform Tuesday. “Further, we are concerned that reaching 2022 adj. Ebitda guidance through lower 4Q ad spending creates a headwind for 2023 that we believe also puts 2023 estimates at risk.”

Rhyee added that while he’s thought that Teladoc should be “well-positioned to benefit” from a growing acceptance of telehealth services, “this evolution is taking longer than expected, particularly as companies are grappling with a potentially faltering economy.”

Shares of Teladoc are off 60% so far this year as the S&P 500

has fallen 14%.

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