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Investing.com - Teradata (NYSE:TDC) received an upgrade from Citizens on Monday, with analyst Patrick Walravens raising his recommendation from Market Perform to Market Outperform and setting a price target of $42.00. The stock currently trades at $27.60 with a market capitalization of $2.57 billion.
The upgrade follows Teradata ’s strategic repositioning to prioritize free cash flow per share growth over the coming years, marking a shift from its previous focus on public cloud ARR growth. This strategy appears well-founded, as InvestingPro data shows the company already maintains a strong free cash flow yield of 11% based on last twelve months’ results.
Citizens highlighted several key factors behind the upgrade, including the May appointment of John Ederer as CFO, the company’s renewed focus on total ARR growth after five consecutive quarterly declines, and improved cost control measures to enhance operating margins.
The firm noted Teradata’s ongoing stock buyback program to reduce share count and management’s commitment to "putting the right pieces in place" for continued improvement next year, as stated by CFO Ederer during the Q3 earnings call. InvestingPro confirms this strategy with a tip highlighting that management has been aggressively buying back shares.
Citizens projects Teradata’s free cash flow per share will grow from $2.81 in 2025 (down 1% year-over-year) to $3.09 in 2026 (up 10%) and reach $3.55 in 2027 (up 15%), which the firm cited as the most important factor in its upgraded outlook. With a PEG ratio of just 0.49, the stock appears undervalued relative to its growth prospects according to InvestingPro data. For deeper insights and additional ProTips on Teradata, investors can access the comprehensive Pro Research Report, available for this and 1,400+ other US equities.
In other recent news, Teradata reported its third-quarter 2025 earnings, revealing stronger-than-expected earnings per share (EPS) of $0.72, which surpassed analyst projections of $0.58. The company achieved a revenue of $416 million, which, although down by 6% in constant currency, exceeded the estimates of $406 million. Teradata’s operating margins were notably higher than anticipated, reaching 23.6% against expectations of 18.4% to 19.7%. Despite these positive results, the company’s stock experienced a decline following the announcement, driven by concerns over revenue declines and cautious forward guidance. In response to the solid earnings results, Evercore ISI raised its price target for Teradata to $28 from $25, while maintaining an Outperform rating. The firm highlighted the company’s ability to exceed both its own and market expectations as a key factor in its decision. These developments are part of the latest updates surrounding Teradata.
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