With its most recent announcement, the business keeps investors and pundits more bearish.
What took place: On Thursday, Teladoc Health (TDOC -5.42%) health looked rather ill for the second day in a row. After an aggressive analyst cut the telemedicine specialist’s price target, investors traded the company’s shares lower by more than 5%.
Therefore, that analyst was Oppenheimer’s Mohan Naidu, who prior to market opening lowered his price target for Teladoc stock from $45 to $37 per share. However, this does not imply that he is bearish on the leading telemedicine company; rather, he is maintaining his recommendation to buy (or outperform) it.
He didn’t say why, but it doesn’t seem like a coincidence. The move came after the company announced in a regulatory filing on Wednesday that it was implementing a restructuring strategy. It will reduce its office space footprint and lay off approximately 300 employees as a result.
CEO Jason Gorevic wrote, “First, we are removing some redundant roles as our merged organizations operate more as one Teladoc Health” in a letter to employees that was attached to that filing. The $18.5 billion merger with a competitor, Livongo Health, was completed at the end of 2020.
Gorevic went on to say, “Second, as we’ve discussed over the past few months and seen across our industry, businesses like ours must transition to more balanced growth of revenue and profitability.”
Now what? That may be the problem, as Teladoc has frequently been deeply unprofitable, despite the popularity of its offerings. For instance, it lost more than $73 million in its most recently reported quarter on revenue of just over $611 million.