Teladoc Health is "hitting its stride," one analyst said Thursday as TDOC stock surged on its third-quarter beat.
The formerly red-hot pandemic-era rock star beat revenue expectations and is narrowing the gap to profitability. Meanwhile, another health care stock, Align Technology, crashed on its broad miss as macro issues continued to weigh on the Invisalign-maker.
On today's stock market, TDOC stock jumped 6.5% to close at 28.47. Align stock, on the other hand, plunged 18.1% to finish at 181.53.
Both stocks were pandemic-era leaders that are now well off their highs. Teladoc stock notched an astronomical run that began in 2019 and peaked in February 2021. Align stock began its rise in early 2020 before topping out in September 2021 and then sliding over the course of a year.
TDOC Stock: Livongo Buyout Pays Off
During the third quarter, Teladoc's sales grew 17% to $611.4 million. TDOC stock analysts polled by FactSet expected $608.9 million in sales. Revenue also came in line with Teladoc's own forecast for $600 million to $620 million.
George Congdon, a senior analyst with research firm Third Bridge, said the strong revenue results are likely tied to Teladoc's acquisition of Livongo Health. Livongo makes personalized programs to help manage chronic diseases like diabetes, high blood pressure and weight concerns.
"Though this was just one quarter, our experts believe Teladoc seems to be hitting its stride on its path to profitability and turning around the business," Congdon said in a note to clients.
Losses also continued to narrow. During the quarter, Teladoc lost 45 cents per share, shrinking from a 53 cent per-share loss in the year-earlier period. TDOC stock analysts expect per-share losses to continue narrowing through at least the end of 2024.
Those 32 analysts have a collective hold rating on TDOC stock.
Align Crumbles As Covid Comparisons Hit
Analysts are less sunny on Align, however. The company reported $890.3 million in third-quarter sales and adjusted earnings of $1.36 per share. Sales fell more than 12% as earnings crashed 32%.
Both measures broadly lagged expectations. Analysts called for Align to earn $2.16 per share on $963.8 million in sales.
In morning trades, Align stock sank to its lowest point since April 2020. Meanwhile, TDOC stock gapped higher and retook its 50-day moving average, MarketSmith.com data shows.
Align shipped 577,170 cases of Invisalign teeth-straighteners, down almost 12% year over year. That was also below expectations for 599,000, Evercore ISI analyst Elizabeth Anderson said. She also noted exchange-rate headwinds continued to plague Align Tech.
Business 'Not Broken,' Analyst Says
"Macro volatility and tough Covid (comparisons) were out in full force this quarter, slowing case growth and negatively impacting margins," she said in a report. "Given (the) print and a more negative macro view on 2023, we are broadly lowering numbers."
But Anderson kept her outperform rating on Align stock, noting shares' fall already reflects a bear view and the likelihood for double-digit growth to return no sooner than 2024.
"The business is not broken," she said.
But both TDOC stock and Align stock have poor ratings from IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
