BofA Lists 10 Reasons to Buy Teradata (TDC), Adds to US 1 List
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BofA Securities analyst Wamsi Mohan reiterated a Buy rating and $71.00 price target on Teradata (NYSE: TDC) while adding the stock to the US 1 List. Mohan listed 10 reasons to buy the stock.
1) LT Cloud ARR target of $1bn driven by strong net dollar expansion rate of 130% (company tracking well head at levels similar to peers at 160%, in our opinion),
2) TDC not assuming much benefit from new logos in cloud and on-prem, but continues to win new logos on-premise and has low single digit churn in non-cloud ARR,
3) Assumes dollar for dollar migration to cloud but is tracking much higher given elasticity that cloud provides,
4) FCF should deliver upside as cash conversion cycle days can improve over time from the mid-60 days,
5) Salesforce now incentivized to grow Cloud revenues,
6) strong FCF margins,
7) total rev growth that appears too conservative based on close to 10% recurring rev growth,
8) new CRO focused on capturing new logos in the G10K serviceable market,
9) ‘Cloud first’ initiatives and investments in go-to-market showing results as some customers who had shifted to competitors like Snowflake are returning to TDC, and
10) valuation remains inexpensive at only 3x EV/Sales.
Shares of Teradata closed at $54.72 yesterday.
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