/Teradyne%2C%20Inc_%20logo%20on%20phone-by%20Piotr%20Swat%20via%20Shutterstock.jpg)
Valued at a market cap of $18.6 billion, Teradyne, Inc. (TER) designs, develops, manufactures, and sells automated test systems and robotics products. The North Reading, Massachusetts-based company primarily focuses on the semiconductor test market, which generates the bulk of its revenues and also provides specialized system testing equipment for specific end markets.
Shares of this tech major have underperformed the broader market over the past 52 weeks. Teradyne has gained 11.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 20.7%. Moreover, on a YTD basis, the stock is down 9.4%, compared to SPX’s 3.1% rise
Narrowing the focus, Teradyne’s underperformance becomes more evident when compared to the Technology Select Sector SPDR Fund’s (XLK) 13.7% returns over the past 52 weeks and 1.6% gains on a YTD basis.
Teradyne released its Q4 results on Jan. 29, and its stock plummeted 5.7% in the following trading session, despite delivering stronger-than-expected Q4 adjusted earnings of $0.95 per share and revenues of $752.9 million. The bottom-line and top-line figures grew 20.3% and 12.2% respectively from the year-ago quarter. The growth was primarily fueled by strong AI-related demand. Additionally, Teradyne raised its Q1 2025 revenue and EPS guidance, signaling optimism for future performance.
However, investor confidence may have been dampened by broader market uncertainties and continued weakness in the industrial automation sector, impacting the company’s robotics business. Challenges in its wireless test business due to a slower ramp of Wi-Fi 7 might have further added to the downtick.
For the current fiscal 2025, ending in December, analysts expect TER’s EPS to grow 21.4% year over year to $3.91. Moreover, the company has a promising earnings surprise history. It surpassed Wall Street's bottom-line estimates in each quarter of fiscal 2024.
Among the 16 analysts covering the stock, the consensus rating is a “Moderate Buy” which is based on 12 “Strong Buy,” two “Hold,” one “Moderate Sell,” and one “Strong Sell” rating.
This configuration is slightly more bullish than three months ago, with 10 analysts suggesting a “Strong Buy” rating.
On Jan. 31, UBS (UBS) analyst Timothy Arcuri maintained a “Buy” rating on Teradyne but lowered its price target to $155, which indicates a 35.9% potential upside from the current levels.
The mean price target of $136.38 represents a 19.6% upside from TER’s current price levels, while the Street-high price target of $165 suggests an upside potential of 44.7%.
