Teradyne ( NASDAQ: TER ) shares slipped in premarket trading on Friday as investment firm Loop Capital downgraded the semiconductor equipment company, citing continuing deterioration in the firm's sales outlook.
Analyst Scott Graham lowered his rating on Teradyne ( TER ) shares to hold from buy and cut estimates, noting that even though the company beat expectations for the fourth-quarter, its first-quarter and second-quarter outlooks were weaker than anticipated.
"Concurrently, we are disappointed in the very weak outlook for the [system-on-a-chip] Test market this year, as provided by [Teradyne], and management's guidance that operating expenses will be flat, instead of down, and share repurchases will decline, instead of rise," Graham wrote in a note to clients.
As such, Graham lowered his adjusted earnings per share estimates for 2023 and 2024 by 22% and 21%, respectively. He also cut his revenue forecast for those time periods by 7% and 9%.
Graham also noted that there was a "downward pivot" in customer orders near Thanksgiving that resulted in Teradyne ( TER ) saying there was less visibility in second-quarter orders.
"The weak [first-half] sales outlook has left management non-committal on whether there would be an improvement in [second-half] sales and earnings," Graham added. "We found this disappointing since our end-market research indicates several of TER's key verticals should improve in [second-half], namely Smartphones (which impacts nearly 50% of sales), PCs and HDDs."
With regards to Teradyne's ( TER ) $500M buyback plan that it instituted, Graham said he thought the company would have a larger program to start.
In addition to releasing its quarterly results this week, Teradyne ( TER ) declared an 11-cent-per-share dividend, payable on March 17 for shareholders of record as of February 17 .
Analysts are largely bullish on Teradyne ( TER ). It has a BUY rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates TER a HOLD .
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Teradyne downgraded by Loop Capital as sales outlook continues to weaken