On a day in which the S&P 500, Dow Jones Industrial Average, and Nasdaq are averaging a -.13% return nearly five hours into trading, there were some big moves from some very popular stocks.
Of course, I’m writing this about 15 minutes after the Federal Reserve raised the federal funds rate to between 5.25% and 5.5%, the highest level in 22 years. Things could change in a hurry.
But for now, here are three stocks to buy from Wednesday’s bullish price surprises.
Teladoc Health
Teledoc Health (TDOC) is one of the country's leading virtual and in-person healthcare providers. It practically invented telehealth services. As I write this, its volume is approaching 30 million, and its share price is up nearly 25%. Its gains are almost 26% year-to-date, suggesting today’s move might be overblown.
Or, maybe, just maybe, it’s the beginning of TDOC’s extended run. Once upon a time, Teladoc stock traded within pennies of $300. While I’m not suggesting it will get there anytime soon, I think investors view its business more favorably for the first time in years.
Why is TDOC up so much? Teledoc reported better-than-expected Q2 2023 results, with the company's mental health platform driving this growth.
On the top line, it generated $652.4 million in revenue, 10% higher than a year earlier and $3.2 million above the analyst estimate. On the bottom line, it lost 40 cents per share in the quarter, one cent better than the consensus estimate. However, the EBITDA (earnings before interest, taxes, and depreciation) improvement really stood out. It was $72.2 million in Q2 2023, 54% higher year-over-year. That exceeded everyone’s expectations.
“This performance is a direct result of introducing and expanding new products and services, investing in a robust innovation pipeline, controlling expenses, and vertically integrating care to capitalize on customer demand for unified virtual and in-person healthcare experiences,” stated CEO Jason Gorevic.
Teladoc’s BetterHelp mental health business experienced an 18% increase in revenue in the quarter to $292.4 million. It now accounts for nearly 45% of the company’s revenue, up from 42% a year earlier. The unit’s adjusted EBITDA increased by 71% in the second quarter, accounting for 47% of Teladoc’s overall non-GAAP profitability.
It is currently valued at 1.4x its estimated sales for the next 12 months, less than Goodrx Holdings (GDRX) and Doximity (DOCS), at 3.2x and 12.3x, respectively.
Tenable Holdings
Tenable Holdings (TENB) has a volume of 2.8 million as I write this Wednesday, 3x its 30-day average volume. Like Teladoc, it reported better-than-expected Q2 2023 results.
The cybersecurity business provides its more than 40,000 customers -- 60% of the Fortune 500 -- with an enterprise software platform that enables them to manage and measure their potential exposure to cyber threats.
Tenable reported its results after Tuesday’s close.
It reported a 19% increase in revenue to $195.0 million with $26.3 million in non-GAAP income, up from $12.2 million a year ago. Analysts expected $188.5 million in revenue and $0.12 a share in earnings. It beat by $6.5 million on the top line and 10 cents on the bottom.
In the quarter, it added 426 new enterprise platform customers, with 63 of them generating more than $100,000 over the next 12 months. It now expects revenue of at least $783 million in 2023, with adjusted net earnings of $81 million at the midpoint of its guidance.
Wedbush Securities analyst Dan Ives has an Outperform rating on Tenable stock. As a result of the company’s results, he raised his target price by $10, to $55, nearly 20% above where it’s currently trading.
Up 25% YTD, TENB looks like it’s just getting going.
Boeing
Boeing (BA) reported second-quarter earnings before the markets opened Wednesday. While the aircraft manufacturer had an adjusted loss of $0.82 a share in the quarter, it was six cents lower than the analyst estimate. On the top line, its revenues were $19.75 billion, $1.30 billion higher than the consensus.
With an hour left in the trading day, BA stock is up 8% on share volume 4x its 30-day average.
Some of the highlights from the quarter include delivering 136 planes, 15 more than in Q2 2022, a backlog of $440 billion, and a free cash flow of $2.58 billion in the quarter, up from $182 million in free cash flow used during the quarter.
However, what got investors excited was the announcement that it would up its 737 and 787 production to 38 and four per month, respectively. That’s a 20% increase in its monthly Boeing 737 Max production. It expects to deliver as many as 450 of the 737 in 2023.
Analysts are generally optimistic about Boeing’s stock. Of the 14 analysts in Barchart.com’s data, 10 rate it a Strong Buy with an overall rating of Moderate Buy (4.29 out of 5) and a $230 mean target price.
Over the past year, BA stock gained nearly 50%, regaining some of the losses from the 737 troubles over the past few years. With production up, look for Boeing to start throwing off more free cash flow.
It’s a long-term buy.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
