Teradyne Stock: The Forecast Looks Better Than Ever

Publicly traded companies are not required by law to give guidance, yet many do as a way to communicate with investors. “Guidance” typically consists of forward-looking statements around what next quarter or next year’s revenues and/or earnings might look like. When a company revises guidance downwards, Wall Street analysts adjust their valuation spreadsheets and stock prices can fall in a dramatic fashion. That’s precisely what happened to Teradyne Inc. (TER) yesterday.

When assessing how a stock price behaves, we always need to consider what’s happening in the broader market. Check out this six-month stock price chart for Teradyne.

About ten days ago, shares of Teradyne started weakening along with the broader tech stock market. Then yesterday, they dropped around -25% giving Teradyne a 30-day return of about -34% compared to a NASDAQ return of -15% over the same time frame. Given the selloff in tech stocks, we can then attribute -19% of that drop to Teradyne’s revised guidance and -15% to the overall market. Today, Teradyne simply trades at the same price it did three months ago. It’s always important to put these price drops in perspective.

Teradyne’s Q4 Earnings Report

Let’s start with looking at