UBS cuts Teradyne stock price target to $130, maintains Buy rating

On Wednesday, UBS analyst Timothy Arcuri revised the price target for Teradyne (NASDAQ:TER) stock, reducing it to $130 from the previous $155 while continuing to endorse a Buy rating for the company. The adjustment comes as Teradyne balances near-term challenges with a positive outlook for the medium and longer-term fundamentals. The stock, currently trading near its 52-week low of $82.98, has experienced significant pressure with a 21% decline in the past week alone. According to InvestingPro analysis, Teradyne appears undervalued based on its Fair Value calculations, with 7 analysts recently revising their earnings expectations downward.

Arcuri noted that Teradyne is navigating a delicate situation with recent softness in the short-term, particularly in semiconductor testing, which is broadly impacting all markets except for mobility, where weakness was already anticipated for June. Surprisingly, the memory segment of semiconductor testing is experiencing weakness despite general improvements in DRAM and NAND fundamentals. This unexpected downturn is attributed to the new export controls into China, leading customers to realize they may not require certain Teradyne testers if they are unable to procure front-end equipment.

Despite these near-term headwinds, Teradyne has not observed any weakness in Industrial Automation (IA), which typically sees more activity towards the end of a quarter. On the contrary, Teradyne is witnessing increased engagement in this area as certain customer verticals look to adopt more automation in response to potential changes in immigration policy affecting their manual labor workforce. The company maintains a strong financial position with a healthy current ratio of 2.91 and operates with moderate debt levels, positioning it well for continued investment in automation initiatives. InvestingPro subscribers can access 12 additional key insights about Teradyne’s financial health and growth prospects in the comprehensive Pro Research Report.

In response to the current market environment, Teradyne is also implementing operational expense reductions for the year while maintaining its target to grow operational expenses at approximately half the rate of revenue growth. As a result of these factors, UBS has revised its revenue and EPS estimates for the company, decreasing its 2025 projections from $3.31 billion and $4.21 to $3.01 billion and $3.59 respectively, and its 2026 forecasts from $4.30 billion and $6.09 to $3.99 billion and $5.44.

Arcuri concluded that despite the reduction in revenue and EPS estimates, and the consequent lowering of the price target, UBS maintains a Buy rating on Teradyne shares. The firm views the current weakness as a compelling opportunity, suggesting confidence in Teradyne’s longer-term prospects. The company maintains strong profitability with a gross margin of 58.5% and has demonstrated consistent dividend payments for 12 consecutive years. For deeper insights into Teradyne’s valuation metrics and growth potential, investors can access the full suite of analytical tools and expert analysis available on InvestingPro.

In other recent news, Teradyne has adjusted its financial outlook, which has led to a series of revised price targets from various analyst firms. The company recently announced updated guidance, indicating potential short-term volatility and uncertainties due to trade and tariff issues, though it assured that first-quarter guidance remains unaffected. As a result, Stifel has lowered Teradyne’s price target to $110, maintaining a Hold rating, while noting the company’s strategic positioning in the semiconductor test market. KeyBanc also reduced its price target to $140 but continues to recommend an Overweight rating, expressing optimism about Teradyne’s long-term prospects despite current challenges.

Cantor Fitzgerald cut its price target to $110, maintaining an Overweight rating, following Teradyne’s Analyst Day where the company revised its financial estimates for 2025 and 2026. Despite the revisions, Cantor Fitzgerald sees Teradyne as a potentially strong investment over the long term. Evercore ISI adjusted its price target to $115, maintaining an Outperform rating, and highlighted Teradyne’s growth potential in AI-driven markets, despite immediate market reactions. The firm believes Teradyne’s revenue could reach $4.5 billion by 2028.

These developments reflect cautious optimism among analysts about Teradyne’s ability to navigate current market uncertainties while positioning itself for future growth. Investors will be closely watching how Teradyne performs against these revised expectations amidst ongoing economic challenges.

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