Teradyne stock price target cut by Craig-Hallum on mixed performance

On Friday, Craig-Hallum adjusted its price target on shares of Teradyne (NASDAQ: NASDAQ:TER), a provider of automated test equipment, reducing it to $111.00 from the previous $124.00. Despite this change, the firm has decided to maintain a Hold rating on the stock.

The revision comes as Teradyne experiences mixed performance across its various business segments. The company has seen its AI-driven semiconductor test segment exceed expectations, but its mobile, automotive, and industrial test businesses have been underperforming.

Teradyne has noted some signs of stabilization within these weaker segments, yet a full recovery is not expected until 2025, with uncertainties still looming regarding the timing and scale of the rebound.

Craig-Hallum's new price target is based on a 17x multiple, a decrease from the previous 19x, applied to the midpoint of Teradyne's mid-term earnings per share (EPS) model, which is projected at $6.50. This adjustment reflects a more cautious outlook given the lack of clear visibility into the company's future performance.

Teradyne's management is anticipated to offer further insights into its long-term financial model for 2026 when it reports its fourth-quarter earnings in January. Shareholders and potential investors are likely to watch for this update to gauge the company's strategic direction and financial health in the coming years.

In other recent news, Teradyne Incorporated surpassed its sales guidance in the third quarter with revenues reaching $737 million and non-GAAP earnings per share at $0.90. The company's Semi Test segment showed strength, particularly in the Memory Test business, contributing to the robust performance.

Evercore ISI recently adjusted its price target for Teradyne to $135, while maintaining an Outperform rating. This follows the company's successful earnings report and is based on the strong performance in High Bandwidth (NASDAQ:BAND) Memory (HBM) and Compute segments.

Evercore also revised its 2024 revenue growth outlook for Teradyne to 5% year-over-year, driven by the strength in AI-driven HBM and networking testers. The firm increased its 2024 System-on-Chip (SOC) Total Addressable Market (TAM) estimate for Teradyne to $4.2 billion, reflecting anticipated growth across several segments.

Fourth quarter sales projections stand between $710 million and $760 million, with non-GAAP earnings per share between $0.80 and $0.97.

These are recent developments for Teradyne, which has seen record revenue in the Memory Test business due to high demand for HBM DRAM. Despite challenges in the wireless testing and memory markets, the company's strategic focus on AI applications and robotics suggests confidence in its growth trajectory. CEO Greg Smith projects sales growth of 20% to 25% for 2025, citing expanding demand in AI Compute and the Chinese market.

InvestingPro Insights

Recent data from InvestingPro sheds additional light on Teradyne's financial position and market performance. The company's market capitalization stands at $18.07 billion, with a P/E ratio of 39.61, indicating that investors are willing to pay a premium for the company's earnings. This high valuation multiple aligns with one of the InvestingPro Tips, which notes that Teradyne is "Trading at a high earnings multiple."

Despite the recent price target reduction by Craig-Hallum, Teradyne has demonstrated strong performance over the past year, with a 1-year price total return of 26.47%. This suggests that the company has been resilient in the face of challenges across its business segments. However, the stock has experienced recent volatility, as evidenced by a 1-week price total return of -12.15%, which corresponds with another InvestingPro Tip stating that the "Stock has taken a big hit over the last week."

For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips on Teradyne, providing a deeper understanding of the company's financial health and market position. These insights could be particularly valuable as shareholders await the company's fourth-quarter earnings report and updated long-term financial model in January.

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