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Valued at a market cap of $16.7 billion, Teradyne, Inc. (TER) designs, develops, manufactures, and sells automated test systems and robotics products. The North Reading, Massachusetts-based company’s products help ensure the quality, performance, and reliability of semiconductors, electronic systems, and wireless devices.
This tech company has considerably underperformed the broader market over the past 52 weeks. Shares of TER have declined 14% over this time frame, while the broader S&P 500 Index ($SPX) has gained 19.3%. Moreover, on a YTD basis, the stock is down 16.9%, compared to SPX’s 8.4% return.
Narrowing the focus, Teradyne has also lagged behind the iShares Semiconductor ETF’s (SOXX) 14.5% uptick over the past 52 weeks and 12.5% YTD rise.
On Jul. 29, Teradyne reported stronger-than-expected Q2 performance, prompting its share price to surge 18.9% in the following trading session. The company’s revenue declined 10.7% year-over-year to $651.8 million, but marginally topped the consensus estimates. Moreover, while its adjusted EPS of $0.57 decreased 33.7% from the year-ago quarter, it came in 5.6% above Wall Street estimates. The above-par performance was primarily driven by its semiconductor test group, with demand for System-on-a-Chip (SoC) solutions, particularly those used in artificial intelligence applications, leading the way.
For the current fiscal year, ending in December, analysts expect TER’s EPS to decline 2.5% year over year to $3.14. The company’s earnings surprise history is promising. It topped the consensus estimates in each of the last three quarters.
Among the 16 analysts covering the stock, the consensus rating is a "Moderate Buy” which is based on eight “Strong Buy,” one "Moderate Buy,” five “Hold,” one "Moderate Sell,” and one “Strong Sell” rating.
This configuration is less bullish than a month ago, with nine analysts suggesting a “Strong Buy” rating and two recommending a “Strong Sell.”
On Aug. 4, Atif Malik from Citigroup Inc. (C) maintained a "Buy" rating on TER with a price target of $117, implying an 11.8% potential upside from the current levels.
The mean price target of $116.87 represents an 11.6% premium from TER’s current price levels, while the Street-high price target of $133 suggests an ambitious upside potential of 27.1%.
