Which beat health information service stock is a better buy?
According to a report by Precedence search, the global telehealth market is expected to reach $224.8 billion by 2030, from $40.3 billion in 2020, indicating an annual growth rate of 18.8% during this period. However, many health technology stocks are now trading well below their all-time highs, giving investors the opportunity to pick up high-quality companies at cheaper prices.
After an astonishing run in 2020, telehealth stocks such as Teladoc (TDOC) and 10x Genomics (TXG) dived last year. While Teladoc stock is trading 76% below all-time highs, 10x Genomics has fallen 60% since April 2021.
A growing addressable market gives Teladoc and 10x Genomics ample room to grow their revenue in 2022 and beyond. So let’s see which telehealth stock should be in your portfolio today.
The Case of the Bull for Teladoc
Teladoc recently released its fourth quarter results and reported revenue of $554.2 million. Its total visits jumped to 4.4 million, from 3.9 million a year ago. The company now expects the number of visits to increase to 4.5 million in the first quarter of 2022 despite the easing of COVID-19 restrictions.
While Teladoc provides sales to grow 2.5% year-over-year to approximately $570 million in the first quarter, total revenue for 2022 could increase 28% to between $2.55 billion and $2.65 billion .
The revenue expansion will allow Teladoc to improve its profit margins as well. In the fourth quarter, its operating loss narrowed to $41.4 million from a loss of $60.6 million a year ago.
Comparatively, its operating cash flow was $194 million in the December quarter, compared to negative in the fourth quarter of 2020. So Teladoc is unlikely to raise equity and dilute wealth. of shareholders given positive cash flow measures and a cash balance of $900. million.
The case of the bull for 10x Genomics
In 2021, 10x Genomics reported sales of $490.5 million, a 64% year-over-year increase. Its net loss was $18.4 million or $0.16 per share. While its loss per share narrowed in the fourth quarter, it was higher than consensus estimates of a loss of $0.09 per share.
Investors were also disappointed with the company’s revenue forecast for 2022, where it pegged sales between $600 million and $630 million, reflecting 24% growth at its median target. Comparatively, analysts forecast 2022 sales at $680 million.
However, the continued pullback in TXG shares presents investors with an opportunity to buy the dip. The ongoing pandemic has highlighted the importance of providing life science teams with the tools to strengthen the development of modern medicine.
10x Genomics can be considered a visionary company because it sells instruments and accessories that allow scientists to analyze the characteristics of a single cell, allowing it to benefit from a
Its devices are installed in the most important institutions in the world, thus multiplying its visibility.
Teladoc stock is valued at market capitalization of $11.35 billion, valuing the company at a forward price to sales multiple of 4.4x. Comparatively, 10x Genomics is valued at a much higher price against the 14.4x sell multiple, making it even more vulnerable if the current sell-off continues.
I think Teladoc’s lower multiple makes it a better bet given that both companies are still unprofitable and growing at similar rates.
TDOC shares were trading at $76.86 per share Monday morning, up $6.12 (+8.65%). Year-to-date, the TDOC is down -16.29%, compared to a -8.18% rise in the benchmark S&P 500 over the same period.
About the Author: Aditya Raghunath
Aditya Raghunath is a financial journalist who writes about business, public stocks and personal finance. His work has been published on several digital platforms in the United States and Canada, including The Motley Fool, Finscreener and Market Realist. Continued…