Why Teladoc and Livongo Stocks Jumped Today

What happened

Shares of Teladoc Health (NYSE: TDOC) and Livongo Health (NASDAQ: LVGO), two telehealth companies that recently agreed to merge, rose sharply on Tuesday. By the time the market closed, the two stocks were up 6.3% and 5.9%, respectively.

The stocks' move higher was likely fueled by a combination of an overall bullish trading day for tech stocks and an analyst's decision to initiate coverage of Teladoc stock with a buy rating.

A chart showing stock prices moving higher

Image source: Getty Images.

So what

D.A. Davidson analyst Hannah Baade initiated coverage of Teladoc with a buy rating and a $250 12-month price target. The price target represents 16% upside -- and that's on top of the stock's more than 6% gain today.

Backing up her optimism for the stock, Baade notes that utilization rates of telehealth solutions are soaring. This secular tailwind, combined with the company's staggering organic growth and market-expanding acquisitions, make Teladoc Health a good investment, she argues.

Of course, given Teladoc's pending merger with Livongo, the two stocks mostly move in lockstep.

Now what

In a Sep. 16 update from Teladoc on the two companies' pending merger, Teladoc management said the transaction was on track to close by the end of the fourth quarter. Of course, there's always a risk that the deal could fall through.

Baade notably believes Teladoc provided conservative third-quarter guidance, setting the stage for actual results during the period to beat the consensus analyst estimate. Management guided for total third-quarter revenue to be between $275 million and $285 million. This compares to revenue of $138 million in the third quarter of 2019. Teladoc's top-line year-over-year comparison will benefit from the company's recent acquisition of InTouch Health, which closed on July 1.

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


Daniel Sparks owns shares of Livongo Health Inc. 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


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