Why This Teradyne Analyst Is Turning Bullish

Teradyne Inc (NASDAQ: TER) shares have gained close to 16% over the past month.

While the company expects mobility to support future growth, this may not materialize, while it faces competition in the data center market from Advantest Corp (OTC: ATEYY), which is better positioned, according to BofA Securities.

The Teradyne Analyst: Vivek Arya downgraded the rating for Teradyne from Neutral to Underperform, while keeping the price target unchanged at $100.

The Teradyne Thesis: Even with Apple Inc (NASDAQ: AAPL) adopting the 3nm process for A17 processors in its latest iPhone, Teradyne’s mobility total addressable market has shrunk by around 40% year-on-year, Arya said in the downgrade note.

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“We continue to see risk of slow, prolonged adoption of 3nm testing equipment that could result in re-use of existing equipment,” the analyst wrote. “Plus, as development costs of leading-edge chips rise, it could lead to delayed adoption of 2nm processors,” he added.

“TER’s robotics/cobot exposure (15% of sales) is an expensive distraction and we see no synergies with the core testing business,” Arya stated. “TER is less exposed to rising investment in assembly/packaging,” he further added.

TER Price Action: Shares of Teradyne had dropped 0.22% at market close to $105.16 at the time of publication on Friday.

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