Bullish stock to watch: Teradyne, Inc. (NASDAQ: TER)

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Teradyne, Inc. (NASDAQ: TER) stock rose over 1.5% on 22nd April, 2020 (as of 2:15 pm GMT-4 ; Source: Google finance)  as the company posted better than expected results for the first quarter of FY 20. The company’s test demand remains solid while entering the second quarter and the balance sheet has over $900 million in available cash, the impacts of the global pandemic on short term Test and Industrial Automation demand remain uncertain. Therefore, the company is prudently managing the cash flow and has suspended the share repurchase program until there is more clarity on the economic front as of April 1, 2020. The second quarter guidance ranges are broader than usual to reflect that demand and supply uncertainty. Overall, the company has reported the GAAP net income for the first quarter of $176.2 million.

Moreover, the first quarter sales and earnings were in line with the company’s January guidance through the extraordinary efforts of the operations team, their supply line partners, and the customer support teams. The production ramps of recent design wins in the System on a Chip and Memory test units continued as planned and the climate in the test businesses remains cautiously positive.

TER in the first quarter of FY 20 has reported 85% increase in the adjusted earnings per share of $1, beating the analysts’ estimates for the adjusted earnings per share of 86 cents, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 43 percent to $704.4 million in the first quarter of FY 20, beating the analysts’ estimates for revenue of $665.5 million. The company got revenue of $484 million from Semiconductor Test (revenue grew 42% y/y on mobility and memory strength), $116 million from System Test (revenue grew 50%), $60 million from Industrial Automation (IA) (revenue declined 9% on global manufacturing weakness) and $43 million from Wireless Test.

For the second quarter ending in July, Teradyne expects its per-share earnings to be in the range of 86 cents to $1.16. The company expects revenue to be in the range of $690 million to $800 million for the fiscal second quarter. The analysts surveyed by Zacks had expected revenue of $555.2 million. The company anticipate the strong Test demand to continue in Q2’20 while IA demand remains weak. The company has flexible operating model, which is positioned to meet strong Q2 test demand and market uncertainty. The company’s long term outlook for both Test and IA remained positive, however the short term outlook is uncertain from the COVID-19 related impacts on global manufacturing activity.

In addition, 2019 LPDDR5 and SOC new product design win ramps that began in the first quarter will continue in the second quarter.

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