By Emily Dattilo

Teladoc Health is an "under-the-radar AI play" that would do well as part of the Amazon or CVS portfolio, Citron Research argued on Thursday.

Teladoc stock gained 9.7% to $12.07 in Thursday trading. This follows a 5.8% increase the day prior after the online healthcare company announced it has signed an agreement to acquire Catapult Health -- a provider of virtual preventative-care services -- in an all-cash transaction for $65 million.

"The market still treats it like a pandemic relic, but it's quietly turning into a cash-generating machine," analysts wrote in note posted on X. "While AI hype stocks trade at wild multiples, Teladoc is using technology the right way -- cutting costs, improving care, and expanding margins -- while actually making money."

Telemedicine growth has curbed, but that ignores the larger picture of profitability, the Citron analysts continued, adding that the company is becoming a high-margin business that industry giants like Amazon or CVS could purchase.

The company spent $400 million in research and development last year as it invested in smarter virtual care, they wrote. Beyond that, Teledoc's offerings predict health problems, which results in fewer emergency-room visits and lowers costs. Teledoc also boasts more than 90 million members, far outpacing what a start-up could offer.

"Wall Street is missing the shift," the Citron team wrote. "Teladoc isn't about hypergrowth anymore -- it's about high-margin, efficient telehealth at scale." As the market catches up, the stock should rise, they added.

Write to Emily Dattilo at emily.dattilo@dowjones.com

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February 06, 2025 13:07 ET (18:07 GMT)

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