Analyst Note| William Kerwin |
We maintain our $167 fair value estimate for wide-moat Teradyne after reporting fourth quarter results in line with our expectations, and it remains one of our top picks in Technology. We see 2023 being challenging for Teradyne amid lower demand across its served markets, but our long-term expectations remain intact and bullish. We continue to anticipate a meaningful rebound in 2024, led by recovering end market demand and a broad ramp of 3-nanometer chip production. We note Teradyne's new 2026 model guidance met our existing expectations. We see shares as significantly undervalued. We think the market is ignoring Teradyne's long-term opportunity and strong competitive position in the face of a cyclical downturn in the short-term. While the firm is exposed to cyclicality, we are confident in long-term trends toward chip complexity driving demand across cycles, and see Teradyne's strong positioning in advanced CPU testing and key customers like Apple, Qualcomm, and TSMC as encouraging.