2 Recovery Stocks to Watch in 2025 News ad

The pandemic has sparked a boom in stocks that provide physical isolation, easy access from home and fitness. Many of these stocks made incredible highs during the lockdown, only to fall just as hard during the post-pandemic normalization period. While many of these stocks have sunk into oblivion, leaving behind their owners’ footprints, some stocks are trying to regain some footing by learning from past mistakes. Here are two former high-growth stocks in the consumer and healthcare sectors that crashed but are looking to rebound in 2025.

Peloton: Riding high and falling low

During COVID-19 restrictions, gym closures have forced consumers to bring gym equipment home. Peloton Interactive Inc. NASDAQ: PTON thrived in this perfect storm as its $2,500 bikes and $4,000 treadmills flew off the shelves and its subscription business led to record subscribers surpassing three million members in 2021, a 200% increase. than year-on-year. Interactive, on-demand and live-streamed fitness classes were available through screens mounted on their bikes. Peloton reported full-year fiscal 2021 revenue of $4.02 billion, up 172% from last year. In January 2021, shares rose to an all-time high of $171.09.

A period of normalization then followed as COVID restrictions were eased towards the end of 2021 and beginning of 2022. The company continued to lose huge amounts of money after posting a profit of $47 million in the second quarter of 2021. Production problems and supply chain disruptions have led to long delivery delays. and backlog, resulting in decreased demand from customers. As people returned to gyms, demand dropped. Peloton shares fell to a low of $2.70 in May 2024.

Replacing the founder with a new CEO

Peloton eventually replaced its CEO Barry McCarthy, previously Netflix Inc. NASDAQ: NFLX And Spotify Technology SA NYSE:SPOTas its founder John Foley stepped down. McCarthy has focused more on digital-only memberships, shifting the focus from hardware to fitness content, prioritizing a subscription revenue model. McCarthy stepped down as CEO in May 2024 as the company also announced a 15% workforce reduction.

Peloton finally reports a breakeven quarter

On October 31, 2024, Peloton reported net earnings per share for the first quarter of fiscal 2025, beating analyst estimates by 15 cents. GAAP net loss was just $1 million, an improvement of $158 million year-over-year. Net cash provided by operating activities increased 92% YoY to $12 million.

Revenue decreased 1.6% YoY to $586 million, beating the consensus estimate of $572.97 million. The company expects to save more than $200 million in operating costs by the end of fiscal 2025.

Strengthening the subscription model and appointing a new CEO

The company has really focused on growing its subscription business. The company had more than 6 million members, 2.9 million paid Connected Fitness subscribers and 582,000 paid app subscribers, resulting in annual subscription revenue of $1.7 billion and a gross subscription profit margin of 67.8%. Two-thirds of its subscribers are women, and the company sees an opportunity to increase its number of male subscribers. Connected Fitness paid subscription churn was 1.9% in the first quarter.

Peloton also announced that it has completed its search for a CEO and announced the appointment of Peter Stern as its new CEO on January 1, 2025. Stern was previously vice president of service at Peloton. Apple Inc. NASDAQ:AAPL. Stern has been a Peloton customer since 2016. Shareholders are hopeful that the new CEO will return the company to profitability in 2025 as positive sentiment dominated the stock’s trading in the $7.00-$9.00 range.

Teladoc: Telemedicine Allows Virtual House Calls Before In-Person Visits Resume

During the pandemic, patients have found it difficult to schedule doctor’s appointments and outpatient surgeries have been largely cancelled. Emergency departments have been cleared for Covid-19 patients. This has caused a surge in virtual visits, which have enabled virtual appointments with doctors thanks to the widespread adoption of telemedicine platforms. Teladoc Health Inc. New York Stock Exchange: TDOC its shares rose from a pre-pandemic price of $67.74 in October 2019 to an all-time high of $308.00 on February 16, 2021. Revenue doubled to $1.1 billion during the 2020 pandemic surge.

Better Health’s $4.5 million acquisition was a game changer

The post-pandemic reopening resulted in slower growth as patients were able to resume doctor visits and elective surgeries. Teladoc continues to expand its network to more than 7,000 board-certified physicians in every U.S. state and more than 125 countries. The company also made a significant strategic investment of $4.5 million to acquire a little-known digital mental health platform called BetterHelp, which provides on-demand therapy with licensed therapists. BetterHelp has made tremendous strides in growing annual revenue by over $1 billion. On August 12, 2024, Teladoc shares finally hit a low of $6.84 and have since risen to $9.21.

Teladoc stabilizes as revenue decline slows

On October 30, 2024, Teladoc reported a loss per share of 19 cents, beating the consensus estimate by 9 cents. The net loss was $33 million and adjusted EBITDA fell 6% YoY to $83.3 million. BetterHelp’s revenue fell 10% YoY to $256.8 million with an adjusted EBITDA margin of 5.9%.

Revenue fell 3% YoY to $640.9 million, beating the consensus estimate of $631.18 million. While U.S. revenue fell 5.8% YoY to $536.18 million, international revenue rose by 14.8% YoY to $104.35 million US integrated care membership grew by 4.1% year on year to a record 93.9 million.

Teladoc Provides Growth Outlook

In a rare turn of events, Teladoc issued growth guidance for the fourth quarter of 2024, with revenue expected to grow $646 million to $662 million versus consensus estimates of $633.02 million.

Teladoc’s new CEO, Charles Divita III, started in June 2024 from GuideWell, the parent company of Florida Blue and Florida Blue Cross Blue Shield plans. Divita was responsible for $23 billion in revenue generated from more than 38.5 million members in 50 states. CEO Divita commented: “As we close out 2024, we are acting with urgency and making changes to better leverage our leadership position in the complex and dynamic markets we serve. We still have a lot of work to do, and 2025 will be a major repositioning. This year, we remain focused on delivering sustainable results and enhancing long-term shareholder value.”

Goldman Sachs likes what they see

Analyst David Roman noted that Teladoc’s integrated care business will contribute to Teladoc’s membership and revenue growth and EBITDA stabilization in 2025. BetterHelp’s more focused strategy could lead to growth in 2026. Roman initiated coverage on Teladoc with a Buy rating and a $14 price target. target.

Before you consider Peloton Interactive, you’ll want to hear this.

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