Stockbrokers are always on the lookout for "The Next Big Thing". Telemedicine undoubtedly belongs in the "technology for the future" category. The Corona pandemic in particular fueled the trend and caused demand for video consultations and other e-health offerings to rise noticeably. According to estimates by Global Data, the use of telemedicine in the USA alone increased from a few tens of thousands to around 1.3 million patients last year. The analysts attest to a rosy future for digitized healthcare services. By 2024, telemedicine is expected to reach revenues of around USD 20 billion, according to Global Data forecasts.
One beneficiary of this development is Teladoc Health. The US company enables virtual care services that cover all areas of human health. Services range from preventative to acute care. Members can raise their concerns through on-demand or even scheduled visits by licensed physicians from various specialties. Even complex case consultations are available with world-leading specialists. In total, Teladoc handled more than 10 million virtual visits last year. That more and more people in general are embracing the digital doctor is shown by a recent survey by US financial services firm Cowen. In December, 42% of telemedicine users surveyed said they had used virtual services more than once, up from 29% in the July survey.
The growing advocacy for e-health services can also be seen in Teladoc's books. Sales skyrocketed from USD 123 million to over USD 1 billion between 2016 and 2020. That represents average annual growth of more than 70%. Operating income turned from red to deep black during that period. While Ebitda was negative USD 40m four years ago, it is expected to be positive USD 110m to 113m in 2020. Teladoc will release its annual results on February 24.
However, the group, which is now present in more than 175 countries, is not only growing organically. Last fall, there was a billion-dollar merger between Teladoc Health and Livongo Health. Livongo, for example, has a networked diabetes meter that transmits blood sugar levels online. Together, they aim to conquer the huge market of diabetes sufferers - around 70 million people are affected in the US alone.
For a long time, the Teladoc share eked out a shadowy existence. But in the past year, the stock gained momentum. In the first half of the year, the share price more than doubled. Following the rally, the stock, which is included in the Dow Jones US Small Cap Index, entered a consolidation phase. In the range of USD 170 to 230, Teladoc moved sideways for months. The 200-day line provided the share with solid support on the downside. In mid-January, the share price broke out above the upper boundary line. At USD 294.65, the share price set a new record.
While on the one hand the chart-technical traffic lights have switched to green, the analysts' guild is not quite so euphoric in view of the advanced valuation on the other hand. From the 26 research studies currently available, a median target of USD 251 can be derived. The highest forecast is USD 330, the lowest USD 205, and the median estimate corresponds to a price decline of 14.80%.
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