By Mackenzie Tatananni
Teradyne stock declined on Thursday after the maker of automatic test equipment's financial guidance failed to inspire confidence.
The company did, however, report a fourth-quarter earnings and revenue beat.
Shares of Teradyne fell 6% to $115.07, snapping a two-day winning streak. As of Thursday afternoon, the stock was the eighth-worst performer in the S&P 500.
Teradyne reported fourth-quarter earnings of 95 cents a share, beating the consensus estimate of 91 cents. Revenue of $753 million also topped Wall Street's call for $741 million.
The company -- which manufactures test equipment for semiconductors and whose clients include Qualcomm and Texas Instruments -- pointed to strong artificial intelligence-related demand as a catalyst for growth.
"For the quarter, AI compute and related memory remained strong while Mobile and Auto/Industrial exceeded our expectations," CEO Greg Smith said.
Despite the earnings and revenue beat, the stock appeared to be falling in response to the company's mixed first-quarter guidance.
Teradyne said it anticipates per-share earnings in the range of 58 cents to 68 cents for the first quarter of 2025, along with revenue between $660 million and $700 million. Analysts surveyed by FactSet had expected earnings of 63 cents a share and revenue of $694 million.
The company said it expects to see "year-over-year revenue acceleration" in 2025 with improving conditions in its semiconductor test, system test, and wireless test divisions.
Secular growth opportunities in AI computing and memory are expected to remain, "and we will continue to invest into these areas," Smith said.
The company announced that it plans to "strategically realign" its robotics division after combining its Universal Robots and Mobile Industrial Robots operations in 2024. Teradyne acquired Universal Robots and Mobile Industrial Robots, two privately held Danish companies, in 2015 and 2018, respectively.
During Thursday's earnings call, Chief Financial Officer Sanjay Mehta explained that the restructuring would "create a single point of contact for customers and partners" across sales, marketing, and service organizations.
"The result of these actions will help drive top-line growth in 2025 and improve our efficiency," Mehta said.
KeyBanc Capital Markets analyst Steve Barger noted that the company's fourth-quarter results topped the firm's call for earnings of 89 cents a share and revenue of $747 million.
However, there were some areas where the results fell short. Gross margins in the quarter came in at 59.4%, 50 basis points below Keybanc's model, while an operating margin of 21.7% was below the firm's model of 22.4%.
Barger has maintained an Overweight rating and $180 price target on shares of Teradyne since July 2024.
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January 30, 2025 14:45 ET (19:45 GMT)
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