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Why Teradyne Stock Surged Higher on Thursday

By Daniel Sparks – Oct 28, 2021 at 12:43PM

Key Points

  • From its healthy profit margins to its core business segment's momentum, analysts have several reasons to be upbeat on Teradyne.
  • The tech company has grown revenue at double-digit rates for eight quarters in a row.

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Analysts are praising the company's momentum.

What happened

Shares of automatic test equipment specialist Teradyne (TER 3.04%) jumped on Thursday. The stock was up more than 11% as of 11:50 a.m. EDT.

The tech stock's move higher follows the company's strong earnings report earlier this week as well as a number of analyst upgrades for the stock since then.

A chart showing a stock price rising.

Image source: Getty Images.

So what

Teradyne said its third-quarter revenue increased 16% year over year to $951 million. Zooming out two years, quarterly revenue is notably up 63%. Adjusted earnings per share for the period rose 35% year over year and 106% from levels two years ago.

"Demand for both our Test and Industrial Automation products remained strong in Q3 and we delivered our eighth consecutive quarter of double-digit, year on year revenue and profit growth," CEO Mark Jagiela said in the company's third-quarter earnings release.

Since then, analysts from Craig-Hallum, UBS, and Cowen have all upgraded their ratings for the stock to buy or an equivalent rating.

Cowen praised the company's healthy profit margins and robust growth in its core semiconductor testing and industrial automation markets. Craig-Hallum and UBS are similarly bullish on the company's semiconductor testing business.

Now what

Looking to the fourth quarter, management said it expects revenue to be between $820 million and $900 million. The midpoint of this range represents 13% year-over-year growth. Management expects "growing demand in Industrial/Automotive Test, Storage Test, and Industrial Automation" to fuel the quarter, according to its third-quarter earnings release.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool recommends Teradyne. The Motley Fool has a disclosure policy.

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