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On Wednesday, Evercore ISI made a significant adjustment to the price target for Teradyne (NASDAQ:TER), reducing it to $115 from the previous $150 while still maintaining an Outperform rating. The revision follows Teradyne’s recent Analyst Day where the company’s shares experienced a 17% decline. The stock has fallen 21% in the past week alone, with the current price of $87.07 sitting near its 52-week low of $82.98. According to InvestingPro analysis, the stock’s RSI suggests oversold territory. This was a result of Teradyne revising its second-quarter and 2025 projections downward, attributing the changes to delays caused by tariffs and new trade restrictions.
Despite the immediate negative reaction in the stock market, Evercore ISI analysts see a silver lining in the long term. They recognize growth potential for Teradyne, particularly as artificial intelligence (AI) drives demand in the compute and networking markets. The company maintains strong fundamentals, with InvestingPro data showing a healthy gross profit margin of 58.5% and robust liquidity with a current ratio of 2.91. For deeper insights into Teradyne’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro. The analysts are optimistic about Teradyne’s prospects to expand its market share in compute testing through the introduction of Custom ASIC and silicon photonics solutions.
However, the analysts also express caution regarding Teradyne’s non-compute and robotics market segments, citing low visibility and market volatility. They believe that while Teradyne’s goal to increase revenue to $5 billion by 2028 may be ambitious, a more attainable figure might be at the lower end of the target model, with revenues reaching $4.5 billion and earnings per share (EPS) of $7.
The new price target of $115 set by Evercore ISI is based on a 21 times multiple of the projected CY28 EPS of $7.20, discounted back to CY25. This valuation suggests a 30% upside potential from current levels. Currently trading at a P/E ratio of 25.77, the stock shows a PEG ratio of 1.2, indicating reasonable valuation relative to growth. The analysts at Evercore ISI conclude by reiterating their positive stance on Teradyne, viewing the stock as an attractive risk/reward opportunity and emphasizing its emerging role in the custom ASIC market.
In other recent news, Teradyne announced its plans to acquire Quantifi Photonics, a company known for its expertise in photonic integrated circuit testing. This acquisition, expected to be finalized in the second quarter of 2025, aims to enhance Teradyne’s capabilities in supporting AI workloads with scalable photonic test solutions. In a separate development, Teradyne provided an update on its financial outlook, indicating short-term volatility in its SemiTest business and new uncertainties due to tariffs and trade restrictions. Despite these challenges, the company expects its revenue for the full year 2025 to grow by 5% to 10% compared to 2024, although 2026 earnings and revenue are trending toward the lower end of their previous model.
Additionally, Teradyne’s management did not provide further comments on the updated guidance, leaving investors to closely monitor the company’s performance in the coming quarters. Meanwhile, Teradyne’s acquisition of Quantifi Photonics is seen as a strategic move to address the increasing demand for optical interconnect solutions in high-performance computing. The completion of this acquisition is subject to customary closing conditions and regulatory approval. These developments highlight Teradyne’s efforts to navigate the complexities of the global trade environment while expanding its capabilities in photonic IC testing.
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