Key Takeaways
- Teradyne stock fell 17% in a week despite a third quarter that beat estimates, with revenue up 70% to $1.31 billion.
- Its fourth-quarter guide keeps revenue flat at about $1.3 billion, and investors seem to have read that as AI test demand peaking.
- UBS cut its target to $430 from $485 and kept its Buy rating.
- The selloff looks overdone, but UBS’s target needs a higher multiple than Teradyne usually gets.
Teradyne (TER) stock is down 17% in the past week, and it didn’t miss anything to get there. Its third quarter beat Wall Street’s estimates, and so did its fourth-quarter guide.
UBS still thinks the selloff went too far. Its $430 target is 65% above Monday’s close.
A beat, and a flat guide
Third-quarter revenue rose 70% from a year earlier to $1.306 billion, and adjusted EPS of $2.29 beat the $2.06 analysts expected.
Teradyne guided fourth-quarter revenue to $1.25 billion to $1.35 billion, above the $1.27 billion consensus. But the midpoint of that range matches the third quarter, which came in below the second quarter’s $1.329 billion.
My read: investors who price AI suppliers on next quarter’s growth saw revenue stuck at about $1.3 billion and took it as a peak.
Wall Street trimmed, and mostly stayed bullish
Four firms cut their targets after the report, including Goldman Sachs, to $440 from $465, and UBS’s Timothy Arcuri, to $430 from $485. Both kept Buy ratings.
TIKR tracks 17 analysts on Teradyne. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Teradyne, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Teradyne’s Analyst Ratings
Is it a buy at this price?
Its fourth-quarter guide works out to about 20% growth from a year earlier. Going into the report, analysts had normalized EPS climbing from $3.96 in 2025 to $9.44 this year and $11.99 in 2027:
That’s 27% growth in 2027 from a company whose fourth-quarter adjusted EPS guide of $1.95-$2.25 is below the third quarter’s $2.29.
At Monday’s close, Teradyne traded at 25x forward earnings. That’s below its five-year average of 32x and far from the 70x it hit at the end of June:
UBS’s $430 target is about 41x the earnings analysts expect over the next 12 months. At its 32x average, Teradyne would be worth about $340, which is still about 30% above Monday’s close.
The way I see it, the selloff went too far for a business growing this fast. But $340 looks more likely to me than $430, which needs Teradyne to beat today’s estimates or trade well above its usual multiple.
The fourth-quarter report, due in late January, has to show revenue growing from one quarter to the next again. If the guide is flat again, analysts will likely lower those 2027 estimates.
So what is Teradyne stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
