Why Teladoc shares fell nearly 12% on Tuesday

In the absence of any other news about the stock’s movement, a 25% increase in an analyst’s price target for Teladoc (TDOC 11.64%) caused the stock to move north on Tuesday. It ended the day almost 12% higher on the move, for a far better performance than the bell’s virtually flat trajectory. S&P 500 index.

25% more optimistic

News of the increase came on the first day shortly before the market opened. Jefferies Forecaster Glen Santangelo now thinks Teladoc is worth $10 per share, up from his previous estimate of $8. In making the change, Santangelo maintained his buy recommendation because the new target is nearly 10% higher than the stock’s most recent closing price.

In the research note detailing the change, the analyst was optimistic about a dramatic turnaround in the performance of Teladoc’s BetterHelp brand. He wrote that his web traffic for the BetterHelp website saw a year-over-year increase in July and August, after 12 months of declining numbers.

That should help the unit do much better in the third quarter than the current analyst consensus suggests — collectively, experts who follow Teladoc’s stock expect BetterHealth to post an 11% year-over-year revenue decline per year, Santangelo added.

An undervalued and underappreciated action, says the expert

In his new Teladoc analysis, Santangelo cautioned that forecast estimates for the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) are “somewhat aggressively modeled” due to what he called “outlier” estimates by some analysts . Still, he sees Teladoc as a good discount buy, not least because investor sentiment is extremely negative (as indicated by the relatively high short interest of around 16%).