Teradyne Sinks 20.1% Despite Posting Strong Q4 Results

Automatic test equipment designer and manufacturer Teradyne, Inc. (NASDAQ: TER) has reported strong results for the fourth quarter ended December 31, 2021. The upbeat results were primarily driven by the growth witnessed in net revenues.

However, following the earnings, shares of the company declined 20.1% to close at $114.50 in Wednesday’s extended trading session. The slump was primarily due to the muted outlook provided by the company.

Revenue & Earnings

Teradyne reported quarterly revenues of $885 million. This denotes a year-over-year growth of 16.6%. Further, the figure surpassed the consensus estimate of $867.62 million.

The company reported earnings per share (EPS) of $1.37 for the quarter, up 24.5% from the prior year. Moreover, the figure surpassed the consensus estimate of $1.29.

Outlook

For the first quarter of 2022, the company expects EPS in the range of $0.76-$0.98, much lower than the consensus estimate of $1.30.

Further, the company expects to post revenues between $700 million to $770 million, lower than the consensus estimate of $877 million.

Management Commentary

The CEO of Teradyne, Mark Jagiela, said, “Both our test and industrial automation businesses delivered another quarter of double-digit revenue growth compared with the year ago period. 2021 was a remarkable year for Teradyne as we increased annual sales by 19% and grew non-GAAP earnings per share by 29%, capping a five year stretch where revenue and earnings grew at an annual compounded rate of 16% and 32% respectively. Significantly, our Universal Robots and MiR businesses are seeing high demand which drove greater than 40% growth in 2021.”

Stock Rating

Consensus among analysts is a Strong Buy based on 11 Buys and 1 Hold. The average Teradyne stock prediction of $168.73 implies upside potential of 17.7% from current levels. Shares have gained 10.2% over the past year.

Increased Hedge Fund Trading

TipRanks’ Hedge Fund Trading Activity tool shows that the confidence in Teradyne is currently Very Negative, as some of the top hedge funds that were active in the last quarter decreased their cumulative holdings by 2.3 million shares.

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