Teradyne Earnings: Long-Term Thesis Intact, and Shares Undervalued After Intraday Selloff

We maintain our $135 fair value estimate for shares of wide-moat Teradyne as our long-term recovery thesis is intact following third-quarter results. Teradyne’s revenue sits well below its 2021 peak, especially for the primary business in semiconductor testing. We don’t expect revenue to return to historical levels until 2026, with a two-year rebound ahead. Third-quarter results and fourth-quarter guidance were positive and fit our thesis. We believe Teradyne is primed for strong growth in 2025, especially in chip testing after three years of depressed sales. The shares are down about 10% in Oct. 24 intraday trading, however, which we attribute to some analyst skittishness on the strength of growth in 2025. Our own estimates are below FactSet consensus but still imply robust growth. With the ongoing selloff, we see the shares as nicely undervalued.