On Tuesday, an analyst from TD Cowen adjusted the price target on shares of Teradata Corporation (NYSE:TDC), a cloud-based data analytics company, from $37.00 to $29.00 while maintaining a Hold rating on the stock. This decision follows Teradata's report of a softer than expected second quarter, with a decline in annual recurring revenue (ARR) and a significant reduction in its forecast for fiscal year 2024.
The company's ARR growth saw a 3% constant currency (cc) decrease, falling short of the analyst's estimate of a 2% decline. In response to these results, Teradata announced a workforce reduction of 9-10% and materially lowered its ARR guidance for FY24. The analyst's own estimate for the company's ARR shifted from an expected growth of 5% to a decline of 3% cc.
Management attributed the disappointing performance to a more challenging macroeconomic environment, which has led to longer decision-making cycles and delayed expansion activities. The analyst does not anticipate a return to positive growth levels for Teradata until the second half of 2025. Additionally, there was a notable reduction in the company's free cash flow (FCF).
The revised stock price target of $29 reflects the analyst's assessment of Teradata's current financial state and outlook, while the Hold rating indicates a neutral stance on the stock's potential for growth or decline in the near term.
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