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Teradyne Posts Strong 3Q Earnings, Upbeat Outlook

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Electronics testing solutions provider Teradyne reported an impressive 53% Y/Y growth in its 3Q adjusted EPS of $1.18, which exceeded analysts’ estimate of $1.12. Shares were up 0.64% in the after-market trading session on Tuesday.

Teradyne’s (TER) 3Q revenue surged about 41% to $819 million and exceeded analysts’ forecast of $770.3 million. Semiconductor Test, System Test, Wireless Test and Industrial Automation businesses contributed revenue of $592 million, $118 million, $41 million and $69 million, respectively.

Commenting on the results, Mark Jagiela, Teradyne’s CEO said “The results were driven by record memory and storage test shipments along with strong System on a Chip (SOC) test demand for mobility and compute devices.”

The CEO attributed the 17% sequential growth in the Industrial Automation sales to improving conditions in the manufacturing sector and new products.

He added, “Entering Q4, market conditions in our test businesses are stronger than expected and we’ve positioned our production capacity to respond to potential short lead time demands as we move through the quarter.”

The company expects 4Q revenue in the range of $680 million to $740 million and adjusted EPS between $0.90 and $1.06. The outlook came ahead of analysts’ expectations of revenue of $543 million and EPS of $0.50.

Referring to the midpoint of its full-year guidance, the company said that it anticipates its sales to grow over 33% to more than $3 billion and adjusted EPS to rise 57% to $4.50 in 2020.

Ahead of the results, Northland Capital Markets analyst Gus Richard reiterated a Hold rating and $86 price target for Teradyne stock on his belief that the company will report at the high-end of guidance and lift 4Q estimates. The analyst said that upside should come from sustained semi test demand as auto and RF [Radio Frequency] pickup, HDD [Hard Disk Drive] system test demand, and early recovery in industrial automation.

The analyst also noted that the current year has been impacted by COVID-19 disruptions and trade friction. (See TER stock analysis on TipRanks)

The Street has a Moderate Buy consensus for Teradyne based on 4 Buys, 2 Holds and 2 Sells. With shares up 29% year-to-date, the average analyst price target of $93.36 reflects an upside potential of 6.2% over the coming months.

This image has an empty alt attribute; its file name is Teradyne.png
This image has an empty alt attribute; its file name is Teradyne.png

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