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Investing.com - Evercore ISI raised its price target on Teradata (NYSE:TDC) to $28.00 from $25.00 on Wednesday, while maintaining an Outperform rating following the company’s strong third-quarter results. This new target aligns with the high end of analyst estimates and suggests Teradata may be undervalued at its current price of $20.71. InvestingPro data shows the company has a PEG ratio of just 0.23, indicating it’s trading at a low P/E ratio relative to its near-term earnings growth potential.
Teradata reported revenue of $416 million, down 6% in constant currency but exceeding both Evercore’s and Street estimates of $406 million. The company achieved operating margins of 23.6%, significantly outperforming expectations of 18.4% to 19.7%, and delivered earnings per share of $0.72 versus estimates of $0.51 to $0.54. This strong performance comes despite Teradata’s overall revenue decline of 6.74% over the last twelve months, according to InvestingPro data, which also reveals the company maintains an impressive 13% free cash flow yield.
Total Annual Recurring Revenue (ARR) reached $1,490 million, flat in constant currency but ahead of consensus estimates of approximately $1,467 million. Cloud ARR grew by 11%, which Evercore noted was "perhaps a little shy of investor expectations," though management had previously indicated third-quarter Cloud ARR growth would be lighter due to some deals being pulled forward into the second quarter.
Teradata maintained its fiscal year 2025 Cloud ARR growth guidance of 14-18% in constant currency, implying $70-95 million of net new Cloud ARR. Evercore believes growth will "ultimately land at or slightly below the low end of the range" as customers evaluate deployment options that could impact the on-premises versus cloud mix.
The operating margin outperformance was attributed to cost efficiency actions from fiscal year 2024, restructuring measures in the second and third quarters, services margin expansion, and a higher recurring revenue mix. InvestingPro analysis reveals management has been aggressively buying back shares, contributing to a high shareholder yield despite the company not paying dividends. Teradata maintains a solid Piotroski Score of 7, reflecting strong financial health despite short-term obligations exceeding liquid assets. For deeper insights into Teradata’s valuation and nine additional ProTips, check out the comprehensive Pro Research Report available for this stock.
In other recent news, Teradata Corp reported its earnings for the third quarter of 2025, posting earnings per share (EPS) of $0.72. This result exceeded analysts’ expectations, which had forecasted an EPS of $0.58. However, despite the earnings beat, the company experienced a decline in revenue and issued cautious forward guidance, which appeared to concern investors. In the wake of these developments, Teradata’s stock experienced a decline in after-hours trading. Additionally, there were no significant mergers or acquisitions reported during this period. Analyst reactions to the earnings report were mixed, with no specific upgrades or downgrades noted from major firms. These recent developments provide a snapshot of Teradata’s current financial situation.
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