Teradyne (NASDAQ:TER) Upgraded to “Buy” by DA Davidson

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Teradyne (NASDAQ:TER) stock fell 1.45% (As on Oct 8, 12:44:36 AM UTC-4, Source: Google Finance) after the company was upgraded by analyst Thomas Diffely at DA Davidson from a “neutral” rating to a “buy” rating. The analyst believes that the company’s core Automated Test Equipment, or ATE, business is expected to remain at elevated levels while noting that the ramping momentum in the Industrial Automation, or IA, group should provide “meaningful” growth in the coming years. Diffely adds that his prior neutral stance reflected his view of a “lackluster” IA performance, but he sees IA momentum returning.

For the third quarter of 2021, the company expects revenue to be in the range of $880 million to $960 million, with non-GAAP net income expected to be in the range of $1.29 to $1.55 per diluted share.

Meanwhile, Teradyne has reported revenue of $1,086 million for the second quarter of 2021 of which $834 million was in Semiconductor Test, $105 million in System Test, $55 million in Wireless Test and $92 million in Industrial Automation (IA). On a non-GAAP basis, Teradyne’s net income in the second quarter was $337.5 million. Test demand across all of our end markets remained high in the second quarter and the strong recovery in our Industrial Automation business broadened geographically. System on a chip (SOC) test shipments were exceptionally strong in the quarter growing nearly 30% from last year’s record level. In Industrial Automation, Universal Robots delivered growth in North America, Europe and China compared with both 2020 and 2019 as the improving global economy and expanding range of automation solutions the company offer powered the highest quarterly group revenue on record. The company posted gross margin was of 59.6% on favorable product mix and higher revenue.

Moreover, Global semiconductor unit and complexity growth and increasing Wafer Fab Equipment (WFE) investments continues to benefit the SemiTest market. Storage Test was up 62% from Q2’20 on data center HDD demand and continued System Level Test (SLT) strength. IA Shipments grew 57% from Q2’20 on UR and MiR strength. Defense & Aerospace and Production Board Test grew 30% on expanded shipments in both groups. Wireless Test segment is expanding UltraWideBand (UWB) adoption fueling future growth potential. Industrial Automation’s sales are improving in all regions with North America growing fastest.

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