Why Is Teradyne (TER) Down 5.5% Since Last Earnings Report?

Core Viewpoint - Teradyne's recent earnings report shows strong performance driven by AI-related demand, with revenues and earnings surpassing estimates, but the stock has underperformed the S&P 500 in the past month [1][2]. Financial Performance - Teradyne reported Q4 2024 earnings of 95 cents per share, exceeding the Zacks Consensus Estimate by 5.56% and increasing 20.3% year over year [2]. - Revenues reached $753 million, beating the Zacks Consensus Estimate by 1.65% and reflecting a 12.2% year-over-year increase [2]. - Revenue breakdown: Semiconductor Test platforms ($561 million, 74.5%), System Test business ($58 million, 7.7%), Wireless Test business ($36 million, 4.8%), and Robotics ($98 million, 13%) [3]. Cost and Expenses - Selling and administrative expenses rose 9.4% year over year to $155.7 million, accounting for 20.7% of revenues, a decrease of 50 basis points year over year [4]. - Engineering and development expenses increased 25.6% year over year to $128.4 million, representing 17.1% of revenues, an increase of 180 basis points year over year [4]. Balance Sheet and Cash Flow - As of December 31, 2024, cash and cash equivalents were $599.6 million, up from $551.7 million as of September 29, 2024 [5]. - Net cash provided by operating activities was $2.82 billion in Q4, an increase from $1.66 billion in the prior quarter [5]. Guidance - For Q1 2025, Teradyne expects revenues between $660 million and $700 million, with non-GAAP earnings projected between 58 cents and 68 cents per share [6]. Market Sentiment - There has been an upward trend in estimates revision over the past month, indicating positive market sentiment [7]. - Teradyne holds a Growth Score of A but lags in Momentum Score with a D, and a D in value, placing it in the bottom 40% for this investment strategy [8]. Overall Outlook - The stock has an aggregate VGM Score of B, indicating a balanced performance across different investment strategies [9]. - Estimates have been trending upward, but the magnitude of revisions suggests a potential downward shift, with Teradyne holding a Zacks Rank 3 (Hold) [10].