2 Beaten-Down Stocks Wall Street Analysts Believe Can Rally Significantly in 2022
Despite the Fed's announcement that it may speed up its tapering of bond purchases, and rising omicron variant fears, analysts remain optimistic about the market's prospects in 2022. Given this...
Despite the Fed's announcement that it may speed up its tapering of bond purchases, and rising omicron variant fears, analysts remain optimistic about the market's prospects in 2022. Given this sentiment, Wall Street analysts expect two beaten-down stocks, Teladoc Health (TDOC) and Peloton Interactive (PTON), to rally significantly in 2022. So, we think it could be worth adding these stocks to one’s watchlist. Read on for a more detailed discussion.
Investor fears about the spread of the COVID-19 omicron variant have contributed to stock market volatility. Adding to the concerns, last week, Federal Reserve Chairman Jerome Powell stated that the Fed might consider speeding up the tapering of its monthly bond purchases.
In October, inflation hit a record high of 6.2%, its highest level since December 1990. So, to keep inflation from spiraling out of control, the Fed plans to tighten its monetary policy. Nevertheless, Goldman Sachs Group, Inc. (GS) expects the S&P 500 to hit 5,100 by the end of 2022.
The shares of Teladoc Health Inc. (TDOC) and Peloton Interactive Inc. (PTON) have suffered significant price declines recently. However, given their strong fundamentals and solid growth attributes, Wall Street analysts expect these stocks to gain substantially in the next 12 months. So, we think they could be great additions to one’s watchlist.
Teladoc Health Inc. (TDOC)
Dallas, Tex.-based TDOC provides business-to-business virtual healthcare services in the United States and worldwide. It provides services to health employers, health plans, hospitals, health systems, insurance companies, and financial service companies. Teladoc, Livongo, Advance Medical, Best Doctors, BetterHelp, and HealthiestYou are the brands under which the company sells its products and services.
In September, TDOC was approved as a pre-qualified vendor by Canada Health Infoway (Infoway) to provide remote patient monitoring solutions across provinces and territories, servicing about 60% of the population of Canada. In addition, earlier this year, the company was also selected as a vendor for virtual visits to increase people's access to healthcare in Canada.
For the third quarter, ended September 30, 2021, TDOC's revenue increased 80.6% from its year-ago value to $521.66 million. Its adjusted EBITDA grew 70.5% year-over-year to $67.37 million. The company’s net cash provided from operating activities surged 80.4% for the nine months ended September 30, 2021, to $110.78 million, while its cash and cash equivalents increased 12.3% year-over-year to $823.83 million over this period.
Analysts expect TDOC’s EPS to increase 40.7% in the current year and 51.6% next year. The consensus revenue estimate of $2.02 billion for the current year represents an 84.7% increase from the same period last year. The stock has declined 32.7% over the past month and 50.1% over the past year.
Of 23 Wall Street analysts that have provided ratings for the stock, 11 rated it Buy, and 12 rated it a Hold. Closing yesterday's trading session at $102.05, the average analyst price target of $159.38 represents a potential 56.2% upside.
Peloton Interactive Inc. (PTON)
PTON sells interactive fitness products worldwide. Under the brands Peloton Bike, Peloton Bike+, Peloton Tread, and Peloton Tread+, the New York City-based company provides connected fitness products with touchscreens that stream live and on-demand classes. In addition, the company offers connected fitness subscriptions for various household users and access to various live and on-demand courses.
During its first fiscal quarter, ended September 30, 2021, PTON’s total revenue increased 6.2% year-over-year to $805.2 million. Its gross profit came in at $262.7 million over this period. And the company’s cash and cash equivalents amounted to $612.6 million for the three months ended in September 2021.
The company’s EPS is expected to increase 70.5% next year. In addition, analysts expect its revenue to grow 14.4% year-over-year to $4.6 billion in the current year. The stock is down 24.9% in price over the past month and 64.1% over the past year.
Of 26 analysts that have provided ratings for the stock, 12 rated it Buy, and 12 rated it a Hold. The $78.42 consensus price target represents a 70.8% potential gain from its last closing price of $45.91.
TDOC shares fell $0.37 (-0.36%) in premarket trading Thursday. Year-to-date, TDOC has declined -48.96%, versus a 26.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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