Cantor Fitzgerald has adjusted its price target for Teradyne (NASDAQ: NASDAQ:TER), a leading provider of automated test equipment, to $160 from the previous $180, while maintaining a Neutral rating on the stock.
This revision on Friday follows Teradyne's recent financial performance, which included a solid earnings beat but a slight revenue miss, with combined second and third-quarter revenues and earnings per share (EPS) expected to be $1.44 billion and $1.62 respectively, aligning with consensus estimates.
Teradyne's recent rally of approximately 50% over the past three months set high expectations that were not fully met by the latest financial results. However, the company reiterated its calendar year 2024 revenue growth forecast, with a slight uptick in the Semiconductor Test segment compared to three months prior, while other testing areas and robotics were noted to be somewhat weaker.
Despite these mixed results, Teradyne's management has confirmed its bullish stance for 2025, with all growth vectors, including those leveraged by advancements in AI, Networking, High Bandwidth (NASDAQ:BAND) Memory (HBM), and Very Important Person (VIP) technology, remaining strong.
The company's efforts to expand its market share in the VIP category have led to higher than expected operational expenses, though gross margin guidance for the year has been reaffirmed. Competition in HBM performance testing is heating up, particularly with industry giants like Hynix and Samsung (KS:005930), but Teradyne seems to be holding its ground in this arena.
On the robotics front, despite current macroeconomic pressures, management's strategic refocusing efforts are showing promise with significant product cycle ramps and success in the OEM channel. While the situation is still developing and outcomes are yet to be fully realized, there is a cautiously optimistic view of the robotics business's potential moving forward.
Looking ahead, Cantor Fitzgerald anticipates Teradyne's EPS to reach $5.00 to $7.00+ in calendar years 2025 and 2026, which is slightly below the company's own target of $5.50 to $7.50 for 2026.
InvestingPro Insights
As investors evaluate Cantor Fitzgerald's revised price target and Teradyne's market position, recent data from InvestingPro offers additional context. Teradyne's market capitalization stands at $19.41 billion, and it is trading at an earnings multiple of 39.07, reflecting a premium valuation in the market. Despite a slight revenue decline of 5.48% over the last twelve months as of Q2 2024, the company maintains a robust gross profit margin of 57.06%. Notably, Teradyne has managed to sustain dividend payments for 11 consecutive years, showcasing its commitment to shareholder returns, and its liquid assets exceed short-term obligations, indicating a solid liquidity position.
InvestingPro Tips highlight that analysts have recently revised earnings expectations downwards for the upcoming period, and the stock has experienced significant volatility, with a notable decline over the last week. However, Teradyne's ability to cover interest payments with its cash flows and a moderate level of debt suggest a stable financial structure. For investors seeking a deeper dive into Teradyne's financial health and future prospects, there are additional PRONEWS24 InvestingPro Tips available, offering insights that could inform investment decisions.
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