Stock Analysis | Teradyne Outlook - A Cautious View Amid Mixed Analyst Ratings and Weak Technicals

Market Snapshot

Takeaway: The technical outlook for Teradyne (TER) is weak, with bearish indicators dominating and an internal diagnostic score of just 1.83, suggesting investors should be cautious.

News Highlights

Recent news underscores broader industry trends and challenges in the semiconductor sector. On May 30, McKinsey released a report on U.S. tariffs and their potential impact on chip supply chains, highlighting the sector’s vulnerability to trade policy shifts. Meanwhile, Japan announced plans to enhance cooperation with the U.S. in rare earths and semiconductors, aiming to reduce reliance on China and address trade imbalances. Additionally, indie Semiconductor’s recent financial underperformance, marked by a negative ROIC of -18.68%, raises concerns over long-term competitiveness in the automotive semiconductor space.

Analyst Views & Fundamentals

Analysts show a mixed outlook for Teradyne. The simple average rating is 3.80, while the performance-weighted rating is slightly higher at 4.62. This suggests optimism among certain institutions, though with some dispersion in ratings. The most recent analyst ratings include two “Strong Buy” and three “Neutral,” reflecting a generally cautious but not entirely bearish stance.

• Analyst Consistency: Analyst views differ, with recent ratings showing a split. The stock is currently up 7.09% in the short term, aligning with the weighted average expectation of a positive trend.

Key fundamental factors, according to our internal model, include:

• Net profit attributable to parent company shareholders / Net profit: 100.0% (internal diagnostic score: 1.83)
• EV/EBIT: 91.39 (score: 5.54)
• Total profit YoY growth rate: -30.18% (score: 1.00)
• Interest coverage ratio: -89.62% (score: 1.83)
• Cash-UP: 6.31% (score: 5.54)

These mixed fundamentals suggest strong cash flow and operating performance, but weaker profitability and margins.

Money-Flow Trends

Despite the stock’s recent rise, large-scale institutional flows show caution. The overall inflow ratio stands at 0.4057, with large and extra-large funds trending negatively (inflow ratios of 0.5159 and 0.3689, respectively). Retail (small) investors remain positive with an inflow ratio of 0.5276. The internal diagnostic score for fund flows is 7.46, indicating relatively healthy retail support but a bearish stance from big-money players.

Key Technical Signals

Teradyne’s technical outlook is weak, with three bearish indicators outweighing no bullish ones. Recent patterns include the MACD Golden Cross, WR Overbought, and Dividend Announcement Date — all of which have historically led to negative returns.

• MACD Golden Cross (internal diagnostic score: 1.00)
• WR Overbought (score: 1.00)
• Dividend Announcement Date (score: 1.00)
• Marubozu White (score: 4.32, a rare positive signal amid the bearish trend)

Recent chart patterns between August 22 and 29 show repeated WR Overbought signals, indicating overextended short-term momentum. The key takeaway from our technical analysis is that the stock is in a weak state and is best avoided for now.

Conclusion

With mixed analyst ratings, a bearish technical outlook, and caution from institutional investors, Teradyne appears to be in a vulnerable position. While fundamentals show strong cash flow, the lack of profitability growth and negative interest coverage are concerning. Investors should consider waiting for a clearer trend or more positive technical and fundamental signals before initiating new positions.