Teradyne’s Stock Struggles: Analyzing Future Opportunities Amid Competition
Teradyne (TER) has seen its shares decline by 11.8% over the past six months, in contrast to the Zacks Computer & Technology sector, which grew by 8.5%. This lackluster performance is largely due to weaker demand in Teradyne’s non-semiconductor testing sectors, particularly within wireless and production board testing. Compounding these challenges are slower gains from the rollout of Wi-Fi 7 and ongoing difficulties in the automotive market.
Steady Revenue Growth Amid Challenges
Despite these setbacks, Teradyne’s future looks promising, thanks to its strong, diversified portfolio. In the third quarter of 2024, the company reported revenues of $737 million, marking a 5% increase compared to the previous year. This growth stems from robust demand in AI-related fields and opportunities in the expanding robotics market.
As investors consider the current dip in Teradyne’s stock, they may ponder whether now is the ideal time to invest.
Teradyne, Inc. Price and Consensus
Teradyne, Inc. price-consensus-chart | Teradyne, Inc. Quote
Innovative Robotics Driving Future Growth
Teradyne is enhancing its position in the robotics industry by harnessing its diverse portfolio and pursuing strategic partnerships. In the third quarter of 2024, the company’s Robotics division experienced an 8% year-over-year growth, fueled by new product introductions like Universal Robots’ heavy payload robots and MiR1200 Pallet Jack, which utilize AI and NVIDIA (NVDA) technology. These innovations have allowed Teradyne to continue expanding even amid challenging market conditions.
Moreover, Teradyne has partnered with NVIDIA to incorporate advanced AI features into its automation solutions. This collaboration enhances the capabilities of UR’s collaborative robots and introduces MiR’s AI-powered Pallet Jack for efficient autonomous pallet management.
In September, Teradyne highlighted its collaboration with Siemens at MxD in Chicago, demonstrating advanced robotics solutions to improve interoperability and AI-driven applications in manufacturing automation.
Raised Guidance Signals Confidence
Looking ahead, Teradyne’s diverse robotics offerings and essential partnerships are likely to positively impact its sales. For the fourth quarter of 2024, the company projects revenues between $710 million and $760 million, while non-GAAP earnings are expected to range from 80 cents to 97 cents per share.
The Zacks Consensus Estimate for Teradyne’s fourth-quarter revenues stands at $740.68 million, indicating a year-over-year growth of 10.45%. Meanwhile, the consensus estimate for earnings has remained steady at 90 cents per share, reflecting a 13.92% increase year-over-year.
Despite its strengths, Teradyne faces significant competition and macroeconomic challenges in the robotics market. Established industrial robot manufacturers like KUKA and ABB (ABBNY), as well as emerging companies in collaborative robotics like Techman and Doosan, represent serious competition. Additionally, autonomous mobile robot makers such as Omron (OMRNY), Rockwell, and Agilox also pose threats to Teradyne’s market share.
Recent share performance shows that competitors like ABBNY and Omron have decreased by 0.9% and 3.3%, respectively, yet have still outperformed TER during the past six months.
Should You Buy, Sell, or Hold TER Stock?
Currently, Teradyne stock may not be considered a bargain; its Value Score of D suggests a high valuation. The anticipated forward 12-month Price/Sales ratio for TER is 6.40, compared to its Zacks Electronics – Miscellaneous Products industry average of 5.01, indicating overvaluation.
With a Zacks Rank #3 (Hold), it may be prudent for investors to await a more favorable opportunity to enter the stock. For those interested, you can find the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
