The COVID-19 pandemic and subsequent restrictions imposed on our outdoor existence was a massive windfall for businesses whose offerings were tailored to help their customers stay operational remotely and indoors.

While the virus is still surviving at large, the severity of its effects has decreased significantly. Therefore, most of the global community has begun to switch back to a predominantly outdoor lifestyle instead of exclusively working from and living at home.

As a result, businesses, such as connected fitness platforms and virtual health service companies, which hit a purple patch at the height of the pandemic, are increasingly finding the wind going out of their sails. Rising borrowing costs due to relentless rate hikes by the Fed and softening consumer demand due to decreased discretionary expenditure are also adding to their owes.

Hence, we suggest avoiding post-pandemic strugglers Teladoc Health, Inc. (TDOC) and Peloton Interactive Inc. (PTON), which seem to have put their best behind them.

Teladoc Health, Inc. (TDOC)

TDOC operates in the health services segment and provides virtual access to care. The company’s portfolio of services and solutions includes various medical subspecialties, from non-urgent, episodic needs to chronic, complicated medical conditions.

For the third quarter of the fiscal year, ended September 30, 2022, TDOC’s adjusted EBITDA decreased 24% year-over-year to $51.21 million, while its loss from operations widened 18.4% year-over-year to $71.73 million. During the same period, the company reported a net loss of $73.48 billion, or $0.45 per share.

Analysts expect TDOC to report a $1.49 per share loss for the fiscal year ending December 2022. Moreover, the company is expected to keep reporting losses over the next two fiscals.

The stock has slumped 71.4% year-to-date and 81.4% over the past year to close the last trading session at $27.16.

TDOC’s bleak prospects are reflected in its POWR Ratings. It has an overall F rating, which translates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

TDOC has a D grade for Growth, Sentiment, Stability, and Quality. It is ranked #76 of 78 stocks in the Medical – Services industry.

To see additional POWR Ratings for Value and Momentum for TDOC, click here.

Peloton Interactive Inc. (PTON)

PTON provides an interactive fitness platform and sells interactive fitness products in North America and internationally. The Company operates through two segments: Connected Fitness Products and Subscriptions. 

For the fiscal 2023 first quarter ended September 30, 2022, PTON’s total revenue decreased 23.4% year-over-year to $217.2 million. During the same period, the company’s loss from operations widened 4% from the prior-year quarter to $374 million, while its comprehensive loss worsened 7% from the year-ago value to $403.6 million.

Analysts expect PTON’s revenues to decline 25.4% year-over-year to $2.67 billion in fiscal 2023. In addition, the company is expected to keep reporting losses for three consecutive fiscals. The stock has declined 73.3% year-to-date to close the last trading session at $9.41.

PTON’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.

It also has a grade of F for Stability and Sentiment and a D for Value and Quality. Within the Consumer Goods industry, it is ranked #58 of 60 stocks.

To see additional POWR Ratings for Growth and Momentum for PTON, click here.

TDOC shares were trading at $28.24 per share on Tuesday morning, up $1.08 (+3.98%). Year-to-date, TDOC has declined -69.24%, versus a -18.10% rise in the benchmark S&P 500 index during the same period.

Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.

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