According to a report from Precedence Research, the global telehealth market is forecast to touch $224.8 billion by 2030, up from $40.3 billion in 2020, indicating an annual growth rate of 18.8% in this period.  However, many health-tech stocks are now trading significantly below all-time highs, giving investors the opportunity to scoop up high-quality companies at cheaper prices.

After an astonishing run in 2020, telehealth stocks such as Teladoc (TDOC) and 10x Genomics (TXG) have plunged in the past year. While Teladoc stock is trading 76% below all-time highs, 10x Genomics has slumped 60% since April 2021.

A rapidly expanding addressable market provides Teladoc and 10x Genomics enough room to expand their top-line in 2022 and beyond. So, let’s see which telehealth stock should be part of your portfolio today.

The bull case for Teladoc

Teladoc recently released its Q4 results and reported revenue of $554.2 million. Its total visits surged to 4.4 million, compared to 3.9 million in the year-ago period. The company now expects visits to increase to 4.5 million in Q1 of 2022 despite the relaxation of COVID-19 related restrictions.

While Teladoc forecasts sales to grow by 2.5% year over year to around $570 million in Q1, total revenue for 2022 might increase by 28% to between $2.55 billion and $2.65 billion.

The expansion in the top-line will allow Teladoc to improve profit margins as well. In Q4, its operating loss narrowed to $41.4 million, compared to a loss of $60.6 million in the year-ago period.

Comparatively, its operating cash flow stood at $194 million in the December quarter, compared to a negative figure in Q4 of 2020. So, it's unlikely for Teladoc to raise equity capital and dilute shareholder wealth given positive cash flow metrics and a cash balance of $900 million.

The bull case for 10x Genomics

In 2021, 10x Genomics reported sales of $490.5 million, an increase of 64% year over year. Its net loss stood at $18.4 million or $0.16 per share. While its loss per share narrowed in Q4 it was higher compared to consensus estimates of a loss of $0.09 per share.

Investors were also disappointed in the company’s revenue forecast for 2022 where it pegged sales between $600 million and $630 million, reflecting a growth of 24% at its midpoint guidance. Comparatively, analysts forecast 2022 sales at $680 million.

However, the ongoing pullback in TXG stock provides investors an opportunity to buy the dip. The ongoing pandemic has showcased the importance of providing life sciences teams with the tools required to enhance the development of modern medication.

10x Genomics can be considered a visionary company as it sells instruments and accessories that enable scientists to analyze the characteristics of a single cell, allowing it to benefit from a 

first-mover advantage.

Its devices are installed in the world’s most prominent institutions increasing its visibility multifold.

The verdict

Teladoc stock is valued at a market cap of $11.35 billion, valuing the company at a forward price to sales multiple of 4.4x. Comparatively, 10x Genomics is valued at a far higher price to sales multiple of 14.4x, making it even more vulnerable if the ongoing sell-off continues.

I believe Teladoc’s lower multiple makes it a better bet given the two companies remain unprofitable and are growing at similar rates.

TDOC shares were trading at $76.86 per share on Monday morning, up $6.12 (+8.65%). Year-to-date, TDOC has declined -16.29%, versus a -8.18% rise in the benchmark S&P 500 index during the same period.

Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist.

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