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North Reading, Massachusetts-based Teradyne, Inc. (TER) designs, develops, manufactures, and sells automated test systems and robotics products worldwide. With a market cap of $20.2 billion, Teradyne operates through Semiconductor Test, System Test, Robotics, and Wireless Test segments.
Companies worth $10 billion or more are generally described as "large-cap stocks," Teradyne fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the semiconductor equipment & materials industry. It serves various high profile customers including Samsung, Qualcomm, Intel, Analog Devices, Texas Instruments and IBM.
Despite its strengths, Teradyne has slipped 23.3% from its 52-week high of $163.21 touched on Jul. 16. Furthermore, the stock has dipped 6.5% over the past three months, underperforming the Dow Jones Industrials Average’s ($DOWI) marginal gains during the same time frame.
However, over the longer term, Teradyne has surged 15.4% on a YTD basis and 18.2% over the past 52 weeks, substantially outperforming DOWI’s 12.3% gains in 2024 and 12.7% returns over the past year.
To confirm the recent downturn, TER has traded below its 50-day moving average since late July and below its 200-day moving average since late October with some fluctuations.
Despite delivering better-than-expected financials, Teradyne stock prices plummeted over 11% in the trading session after the release of its Q3 results on Oct. 23. Driven by strong AI-related demand, the company’s net revenues grew 4.8% year-over-year to $737.3 million, which exceeded Wall Street’s expectations by a notable 3.3%. Moreover, the company’s non-GAAP EPS surged 12.5% year-over-year to $0.90, surpassing analysts’ estimates by an impressive 15.4%.
However, Teradyne has experienced a massive surge in its operating expenses, with its selling, general and admin expenses increasing nearly 14% year-over-year to $157.6 million, representing 21.4% of the company's revenue proceeds being spent on such expenses. Furthermore, Teradyne’s Q4 non-GAAP EPS guidance of $0.80-$0.97 fell significantly below analysts’ expectations, which unsettled investor confidence.
Nevertheless, Teradyne has significantly outperformed its peer Keysight Technologies, Inc.’s (KEYS) marginal gains over the past year.
Among the 16 analysts covering the TER stock, the consensus rating is a “Moderate Buy.” The mean price target of $138.25 suggests a 10.4% upside potential from current price levels.
