Teladoc Health (NYSE:TDOC) is among the pandemic-driven high-fliers on a sustained downtrend. At the height of the lockdown, investors piled into companies that would thrive in a stay-at-home and work-at-home scenario. In one year’s time, shares of the virtual healthcare services company rocketed 175% to a high of $308, made in February 2021.

Currently, TDOC stock is trading below $70, down 55% from early November. Teladoc cannot blame its underperformance solely on the bashing growth stocks have taken in 2022, though. Its ambitious Livongo acquisition will take time to meaningfully add to results, and investors are impatient. They are selling TDOC stock now and asking questions later.

Growth Fails to Lift TDOC Stock

Teladoc is a global leader in virtual healthcare with 76 million members and 10,000 providers.

The company reported third-quarter results on Oct. 27, delivering some impressive growth. Revenue jumped 81% year over year to $522 million, while the number of visits rose 37% to more than 3.9 million. Meanwhile, management said it expects full-year revenue to be about 85% higher at just over $2 billion. It also highlighted “significant” new agreements with CVS Health (NYSE:CVS) and Centene (NYSE:CNC).

However, the company reported a net loss of $84.3 million for Q3, more than double the loss in the year-ago quarter. That was actually better than analysts were hoping for. Yet, losses for the first nine months of 2021 ballooned 358% year over year to $417.8 million.

A big part of the increase in Teladoc’s losses was due to the higher amortization of acquired intangible assets from Livongo and InTouch Health. Still, as investors turned their attention from growth to profitability, TDOC stock has suffered.

What Teladoc Needs to Prove

Teladoc expects to expand its profit margins by gaining scale. Its revenue growth demonstrates this is achievable. Increased operating leverage from its marketplace, investments from research and development, and growth in consumers and clients will raise its adjusted EBITDA over time.

Growth investors should brace for the dramatic shift in market sentiment to limit or hurt the stock’s performance in the near term. Teladoc still has vested stock awards related to the Livongo merger. Shareholders realize the deal will enrich Livongo staff while hurting their holding.

To justify continued investments in Teladoc, the company needs its virtual and healthcare services to keep growing. Eventually, revenue will outpace costs and stock-based compensation will ease. Moreover, Teladoc needs its business growth to accelerate despite Covid-19 lockdowns permanently easing.

The company’s virtual care offers consumers a convenient way to meet their healthcare needs. Teladoc can build on that user experience. For example, it could offer a holistic solution that meets more than just a few customers’ needs. The firm’s suite of offerings includes a broad spectrum of coordinated care services. It can build on chronic care and mental health care through its virtual medical care services.

Currently, referrals should sustain growth. To achieve accelerated growth, Teladoc must go to market by expanding internationally through a direct-to-consumer channel.

Healthcare systems will recognize the value of its data science, which will deliver actionable insight for data providers. Furthermore, consumers are more engaged and better informed. By getting better healthcare services and health outcomes, Teladoc is a major contender in the virtual health care field.

TDOC Stock Valuation, Risks

According to Stock Rover, a quant scoring service, TDOC stock has a fair grade on quality, value and growth.

Chart courtesy of Stock Rover.

The value score suggests Teledoc’s stock price may fall further. Eventually, though, value investors will recognize that the stock is inexpensive relative to its growth prospects for the next three to five years.

The company’s expanded scope of products will keep its membership base satisfied. Its widening offerings should also help attract new consumers, boosting growth.

For example, according to a recent presentation, Teladoc has 76 million individuals who have access to its telemedicine solutions, plus another 16 million who have a contract for its chronic care solutions. Those 92 million members will give Teladoc a chance to cross-sell high-value products and services.

As for risks, telemedicine is still a nascent field that competes with traditional in-person health care. The firm may take longer than investors hope to increase its market share. Furthermore, Teladoc risks a membership growth slowdown and may need to buy more firms or increase R&D spending to attract more customers.

The Bottom Line on TDOC Stock

In a five-year discounted cash flow revenue exit model, readers may assume the following revenue multiple:

Model courtesy of finbox.

In this interactive model, adjust the revenue growth rate to re-calculate the stock’s fair value. I forecasted revenue to grow by at least 75% annually through the fiscal year 2024. This would suggest a fair value of around $110, or 58% higher than today’s price.

Investors have no idea when Teladoc’s stock will stop dropping. So, consider starting with a small position first. As sentiment improves and the company gets closer to profitability, build a bigger allocation in TDOC stock.

Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns.