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On Friday, UBS analyst Timothy Arcuri adjusted the price target on Teradyne (NASDAQ:TER) shares to $155.00, down from the previous $160.00, while reiterating a Buy rating on the stock. The adjustment comes as Teradyne’s stock has experienced a significant 11.4% decline over the past week, currently trading at $115.08. According to InvestingPro data, analyst price targets for the stock range from $117 to $180, suggesting potential upside from current levels. Arcuri’s assessment followed Teradyne’s recent earnings call, which he found frustrating but still indicative of a potential buying opportunity for investors. He pointed out that the main issues were with Teradyne’s industrial automation segment, which investors had largely dismissed from their valuation models due to its underperformance.
Arcuri noted that Teradyne is planning significant cost reductions in its industrial automation business, which could improve its financial outlook. He also mentioned that the company’s core test businesses remain on track. The company’s financial foundation appears solid, with InvestingPro analysis showing a strong current ratio of 3.09 and a healthy overall Financial Health Score of 2.57, indicating good operational stability. Despite Teradyne offering soft guidance for June, which suggests seasonality at the lower end of historical patterns, Arcuri argued that the guidance might be conservative and potentially biased towards the upside.
The UBS analyst highlighted that while investors are cautious about Teradyne’s forecasts, the company’s long-term projections, including its 2026 forecast and its 2028 model targeting approximately $8.25 earnings per share, suggest that the stock is undervalued compared to others in the sector. Arcuri also addressed the company’s stance on the mobility portion of the system-on-chip (SOC) market, noting that Teradyne has now reverted to expecting no growth in 2025, a position that he finds difficult to align with the increasing transistor intensity and the push of artificial intelligence to the edge.
In conclusion, while Arcuri trimmed his estimates and reduced the price target from $160 to $155, he maintained a Buy rating on Teradyne shares, viewing the recent pullback as an opportunity for investors to buy into the company. The stock currently trades at an earnings multiple of 35.75x and an EV/EBITDA of 27.2x. For a deeper understanding of Teradyne’s valuation and growth prospects, investors can access comprehensive analysis and 12 additional key insights through InvestingPro’s detailed research reports.
In other recent news, Teradyne reported robust fourth-quarter earnings exceeding both Stifel’s and consensus estimates with revenues of $737 million and non-GAAP earnings per share at $0.90. This comes alongside Morgan Stanley (NYSE:MS)’s decision to downgrade Teradyne’s stock to Underweight and lower its price target to $112 due to the company’s diminishing market share and competition from Advantest. Meanwhile, analysts from Stifel and Cantor Fitzgerald maintained their Hold and Overweight ratings respectively, with price targets of $125 and $160.
Other developments include the announcement that Ford (NYSE:F) Tamer, a member of Teradyne’s Board of Directors, will not stand for re-election at the upcoming annual shareholders meeting in 2025 due to his recent appointment as CEO of Lattice (OTC:LTTC) Semiconductor Corporation. Teradyne’s revenue growth is anticipated to accelerate, with revenues predicted to reach approximately $4.4 billion in 2026. These are recent developments that investors should keep a close eye on as they could have significant implications for Teradyne’s future performance.
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