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North Reading, Massachusetts-based Teradyne, Inc. (TER) designs, develops, manufactures, and sells automated test systems and robotics products. Valued at $20.6 billion by market cap, the company's test equipment products and services include, semiconductor test systems, military, aerospace test instrumentation, circuit-board test, inspection systems, automotive diagnostic, and test systems.
Shares of this leading automated test solution supplier have slightly outperformed the broader market over the past year. TER has gained 29.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 24.9%. In 2024 alone, TER stock is up 21.4%, surpassing SPX’s 16.2% rise on a YTD basis.
Narrowing the focus, TER has underperformed compared to the iShares Semiconductor ETF (SOXX). The exchange-traded fund has gained about 41.2% over the past year. However, TER’s gains on a YTD basis outshine the ETF’s 20.7% returns over the same time frame.
TER’s overall performance can be attributed to strong momentum in the memory test end-market and demand recovery in SoC, despite soft demand in the automobile sector. The company experienced increased demand from both compute and memory customers due to the implementation of AI applications, along with sequential and year-over-year growth in its robotics business.
On Jul. 24, TER announced its Q2 results, and its shares fell 13.3% in the following trading session due to weaker-than-expected earnings guidance. The company reported an adjusted EPS of $0.86, beating expectations of $0.76. Revenue of $729.9 million surpassed forecasts of $706.6 million. For Q3, TER expects its adjusted EPS to be between $0.66 and $0.86 and revenue to be between $680 million and $740 million.
For the current fiscal year, ending in December, analysts expect TER’s EPS to grow 3.1% to $3.02 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 16 analysts covering TER stock, the consensus is a “Moderate Buy.” That’s based on nine “Strong Buy” ratings, six “Holds,” and one “Moderate Sell.”
This configuration is less bullish than a month ago, with 11 analysts suggesting a “Strong Buy.”
On Jul. 26, Evercore ISI analyst Vedvati Shrotre reiterated a “Buy” rating on TER with a price target of $145, implying a potential upside of 10.1% from current levels.
The mean price target of $144.62 represents a 9.8% premium to TER’s current price levels. The Street-high price target of $180 suggests an ambitious upside potential of 36.6%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
