Forget Teladoc and Buy This Healthcare Stock Instead

Telemedicine leader Teladoc Health (NYSE: TDOC) has been struggling for several years. The company's services are no longer experiencing the kind of demand they did during the pandemic years. Furthermore, some of its otherwise impressive growth drivers, including its virtual therapy service, BetterHelp, are facing stiff competition. The result of all that has been declining revenue.

Management has made some efforts to turn things around, but so far, none have been successful. And in my view, the company is unlikely to bounce back anytime soon. Investors should consider cutting their losses and exploring other beaten-down healthcare stocks -- in particular, Pfizer (NYSE: PFE).

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Why the drugmaker is a better choice

Pfizer also saw its revenue, earnings, and share price jump significantly during the firs few years of the pandemic. In the pharma giant's case, that was because it marketed one of the leading coronavirus vaccines, Comirnaty, and followed that up by launching Paxlovid, a highly successful antiviral treatment for it. However, the strong sales of those products didn't last long, and over the past three years, Pfizer's revenues have (mostly) declined, and its bottom-line numbers have been uninspiring.

Its shares have declined by 50% over this period. But Pfizer's path to a rebound (unlike Teladoc's) seems clear. Even aside from the fact that Pfizer is a well-established corporation that still generates significant profits, it has made moves in recent years that should pay off in the medium term.

One of the most important tactics was to splurge on acquisitions, which have allowed it to significantly expand its pipeline. Pfizer is expected to secure approvals for several new products in the next few years, which will help stabilize its sales and earnings growth. The company is also targeting attractive markets such as weight management. It's also pursing new treatments inoncology, which remains one of the largest therapeutic areas in terms of sales, and where there is always a need for breakthroughs.

Pfizer has over 100 programs in clinical trials. Additionally, the drugmaker has initiated initiatives to address potential threats to its stability. For example, Pfizer signed a deal with President Donald Trump that will grant it a three-year exemption from Trump's tariffs in exchange for selling some medicines at lower prices to some groups of patients in the U.S. Pfizer is facing challenges to both its top and bottom lines, but it has a clear path to a better future, which is more than can be said about Teladoc.

Teladoc isn't a cheap stock

Teladoc's ecosystem of members and its international expansion efforts might suggest to some that it has significantly more upside than Pfizer, which is a much larger company by market cap. However, Teladoc has been unable to establish itself in its most important growth market -- virtual therapy -- and continues to bleed red ink while facing competitors in its niche that have much deeper pockets, including Amazon. The telemedicine specialist isn't a bargain and could ultimately destroy more shareholder value in the next few years. Pfizer is a much better option right now.

Prosper Junior Bakiny has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Pfizer, and Teladoc Health. The Motley Fool has a disclosure policy.