Teradyne (NYSE: TER), a company that develops automatic test equipment focused on the semiconductor, industrial automation, and wireless industries, gained about 5% over the last week and by about 4% over the last month, compared to the S&P 500 which remained roughly flat. Teradyne stock also remains up by a solid 45% over the last quarter. There are a couple of factors likely driving the recent rally. Firstly, demand for the company’s products and services is rising following the Covid-19 lockdowns. For instance, the semiconductor testing business is seeing higher traction driven by demand for mobile applications processors and RF chips, while the industrial automation business also sees rising sales of its robotics products as the capex cycle across industries picks up. Over Q3 2021, the company posted a stronger than expected set of earnings with revenue rising 15% versus last year and adjusted EPS growing 35%. Separately, Teradyne stock also trades at a relatively reasonable valuation (about 25x forward earnings) considering its recent growth, and it’s possible that the stock is benefiting as investors rotate out of high-multiple names into more value picks as the Federal Reserve has outlined multiple interest rate hikes for this year.
Given that TER stock is up 4% over the last month, will it continue its upward trajectory, or is a decline looking imminent? Going by historical performance, there is a higher chance of a rise in TER stock over the next month. Out of 1,058 instances in the last ten years that TER stock saw a twenty-one-day rise of 4% or more, 641 of them resulted in TER stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 641 out of 1058, or a roughly 61% chance of a rise in TER stock over the coming month, implying that TER stock may be a good bet in the near term. See our analysis on Teradyne Stock Chance of A Rise for more details.
While TER stock may see higher levels going forward, it is helpful to see how its peers stack up. Check out Teradyne Stock Comparison With Peers to see how TER stock compares against peers on metrics that matter. You can find more useful comparisons on Peer Comparisons.
Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten years data
- After moving 5% or more over a five-day period, the stock rose in the next five days on 56% of the occasions.
- After moving -1% or more over a ten-day period, the stock rose in the next ten days on 58% of the occasions
- After moving 4% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 61% of the occasions.
This pattern suggests that there is a higher chance of a rise in TER stock in the near term.
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| Returns | Jan 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| TER Return | 1% | 1% | 548% |
| S&P 500 Return | -2% | -2% | 108% |
| Trefis MS Portfolio Return | -7% | -7% | 264% |
[1] Month-to-date and year-to-date as of 1/16/2022
[2] Cumulative total returns since the end of 2016
Trefis
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