Why Teradyne, Inc. (NASDAQ: TER) stock is soaring

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Teradyne, Inc. (NASDAQ: TER) stock surged over 6.9% on 23rd October, 2019 (as of 9:42 am GMT-4; Source: Google finance) driven by decent third quarter of FY 19. On a non-GAAP basis, Teradyne in the third quarter has reported the net income of $133.4 million.

TER in the third quarter of FY 19 has reported the adjusted earnings per share of 77 cents, beating the analysts’ estimates for the adjusted earnings per share of 70 cents. The company had reported the adjusted revenue of $582 million in the third quarter of FY 19, beating the analysts’ estimates for revenue of $567.9 million. The company received $398 million revenue from Semiconductor Test, $73 million in System Test, $69 million in Industrial Automation and $42 million in Wireless Test.

During the fourth quarter, Memory test shipments grew 23% sequentially on Flash demand and Industrial Automation revenue grew by 4% compared to the third quarter of 2018.

Additionally, the company has declared a quarterly cash dividend of $0.09 per share, which was paid on September 27, 2019 to shareholders.

For the fourth quarter ending in December, Teradyne expects its per-share earnings to be in the range of 73 cents to 84 cents. The company expects revenue to be in the range of $590 million to $630 million for the fiscal fourth quarter while analysts surveyed by Zacks had expected revenue of $532.2 million. For the fourth quarter the strong outlook will be driven mainly by continued 5G and memory related Semiconductor Test demand and improved storage test shipments.

For the full year 2019, the company expects the year-over-year sales to grow more than 7% to over $2.2 billion and non-GAAP earnings per share is projected to grow 16%.

Meanwhile, TER has signed an agreement to acquire AutoGuide for $165 million, that will comprise of $58 million net of cash acquired and $107 million if certain performance targets are met extending potentially through 2022. The acquisition is expected to close in the fourth quarter of 2019, after the fulfilment of the customary closing conditions and getting requisite regulatory approval. AutoGuide is projected to more than double its revenue in 2019 from about $4 million in 2018. AutoGuide’s products include the Max N10 Tugger, Pallet Stacker and SurePath fleet management software. Combining of both the company’s product strengths will provide new opportunities for the creation of end-to-end automation solutions for customers seeking the safest and most productive material-handling operations from a single source.

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