Markets

Why Livongo Health and Teladoc Health Stocks Are Tumbling Today

What happened

Shares of Livongo Health (NASDAQ: LVGO) were tumbling 5.2% lower as of 11:25 a.m. EDT on Monday while shares of Teladoc Health (NYSE: TDOC) were down 6.3%. The declines came after Stifel analyst David Grossman downgraded Livongo from a buy recommendation to a hold.

So what

Since Teladoc and Livongo announced plans to merge earlier this month, the two healthcare stocks have been joined at the hip. When one goes down, the other marches in lockstep. It makes sense, therefore, that bad news for Livongo would also negatively impact Teladoc.

Person holding smart phone displaying blood sugar level

Image source: Getty Images.

However, the news in this case doesn't really seem to be all that bad. Stifel already had a hold recommendation for Teladoc. It's not surprising at all that the firm would change its recommendation of Livongo to be the same. Also, David Grossman kept his price target for Livongo at $137. After today's decline, the stock is below that level.

Analysts' downgrades should be taken with a grain of salt, though. Wall Street analysts typically focus more on the short term than the long term. The long-term prospects for Livongo and Teladoc appear to be strong.

Now what

The Teladoc-Livongo merger is expected to close later this year. Both companies should report quarterly updates before then. With the COVID-19 pandemic driving increased demand for telehealth and remote chronic disease management, don't be surprised if the pullback for these two stocks is relatively short-lived.

10 stocks we like better than Teladoc Health
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Teladoc Health wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of August 1, 2020

 

Keith Speights owns shares of Livongo Health Inc and Teladoc Health. The Motley Fool owns shares of and recommends Livongo Health Inc and Teladoc Health. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

TDOC

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More