Gold prices steady ahead of Fed decision; weekly weakness noted
On Wednesday, Northland analysts adjusted their outlook on Teradata Corporation (NYSE:TDC), downgrading the stock from Outperform to Market Perform and significantly reducing the price target to $21 from the previous figure of $37. This shift in valuation reflects concerns over the company’s annual recurring revenue (ARR) and the potential impact of general artificial intelligence (GenAI) on analytics spending. According to InvestingPro data, the stock has seen a significant 29.5% decline year-to-date, though it maintains a "GOOD" overall financial health score.
The analysts noted that Teradata’s results for the March quarter were consistent with expectations, but the full-year outlook has been tempered at the lower end due to the discretionary nature of the company’s services. Despite this, Teradata anticipates a stabilization in ARR in the second half of 2025, as the decline in on-premise services is expected to lessen. The company maintains strong fundamentals with a 60.7% gross profit margin and generated $279 million in free cash flow over the last twelve months.
However, Northland expressed caution regarding the growing secular risk posed by GenAI, which they believe could marginalize analytics spending. This emerging technology trend has the potential to reshape industry landscapes, and analysts are keeping a close eye on its development and influence.
The revised price target is based on a 10x multiple of Teradata’s projected earnings per share (EPS) for the calendar year 2025. This adjustment represents a more conservative stance on the company’s future financial performance in light of the identified risks and market conditions. InvestingPro analysis suggests the stock is currently undervalued, with analyst targets ranging from $21 to $37, and 12 additional exclusive insights available to subscribers.
Teradata, a company specializing in database and analytics-related software, services, and products, is navigating a changing technological environment. With GenAI on the rise, the firm must adapt to maintain its competitive edge and market position. The downgrade by Northland signifies a recalibration of expectations as analysts continue to monitor the evolving landscape. For deeper insights into Teradata’s positioning and comprehensive analysis, investors can access the detailed Pro Research Report available exclusively on InvestingPro.
In other recent news, Teradata Corp reported its Q1 2025 earnings, revealing an EPS of $0.66, which exceeded analysts’ expectations of $0.57. However, the company’s revenue fell short, coming in at $418 million against a forecast of $425.42 million. Despite the EPS beat, the revenue miss contributed to a mixed reaction from investors. Teradata’s focus on cloud solutions showed progress with a 16% year-over-year growth in public cloud ARR. The company announced new executive appointments, including a new CFO, John Ederer, and a strategic emphasis on AI and data integrity. Analysts at Morgan Stanley (NYSE:MS) and other firms showed interest in the company’s cost optimization strategies and its potential in AI and hybrid cloud solutions. Teradata’s strategic vision received recognition as it was named a leader in the Forrester Wave on data management for analytics platforms. Looking ahead, Teradata anticipates total ARR growth in Q4 2025 and expects cloud ARR growth of 14-18% for the year.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.