Guggenheim Starts Teradata (TDC) at Neutral, 'Undervalued but Tera-Complicated'

Guggenheim analyst Howard Ma initiates coverage on Teradata (NYSE: TDC) with a Neutral rating.

The analyst comments "We are initiating coverage of Teradata (TDC) with a NEUTRAL rating. At 2.6x EV/NTM recurring revenue, TDC shares are priced as if the business will decline 10% annually in perpetuity. Unlike many investors who assume Teradata will be supplanted by Snowflake and the hyperscalers, we believe Teradata, which pioneered the category decades ago, has picked up its slack, including launching its own elastic, cloud-native data lakehouse CloudVantage Lake). It’s too early to tell if Teradata will be a turnaround story (channel check still say no) but Total ARR is still growing when excluding FX and its Russia exit, albeit moderating, due to macro headwinds. If the Cloud strategy works, this will be an acceleration story, we believe from low-single growth in 2023 to mid-single digit growth exiting in 2025. But given the Russia and macro impacts, 2025 Total/Cloud ARR and revenue targets need to come way down (the FCF target is still possible though), while initial 2023 guidance will be below consensus. We don’t want to be in front of this uncertainty even with very limited downside risk."

For an analyst ratings summary and ratings history on Teradata click here. For more ratings news on Teradata click here.

Shares of Teradata closed at $33.96 yesterday.

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