Teradata (TDC) PT Lowered to $46 at Evercore ISI
Evercore ISI analyst Chirag Ved lowered the price target on Teradata (NYSE: TDC) to $46.00 (from $58.00) while maintaining a Outperform rating.
The analyst comments "TDC delivered mixed F1Q results with total revenue of $465mn (-1% y/y in c/c) vs. our/Street expectations of $446.4/$461.9mn, total ARR of $1,480mn (-1% in c/c) vs. our/Street expectations of $1,498/$1,520mn, and EPS of $0.57 coming in ahead of our/Street estimates of $0.55/$0.55. Most significantly, cloud ARR landed at $525mn, up 36% in c/c but down by $3mn sequentially; when excluding a $5mn F/X headwind, cloud ARR grew by $2mn, though this was still below the +$4-7mn that management was expecting. However, given that TDC has guided to ~$200mn of FY24 net new cloud ARR – 50% of which is expected to land in F4Q – we believe the F1Q shortfall will have a minimal impact, especially when considering that TDC revamped its deal tracking processes last quarter, added 100+ new logos into its pipeline over the last couple months, and has strong visibility into its existing on-prem base looking to migrate to VantageCloud. Management retained its full year guidance, and we do not view the guide as any “riskier” now given the small F1Q contribution to cloud ARR. Bottom line: With shares trading at 8x EV / CY25 FCF and 15x CY25 EPS (and 2x EV / CY25 revenue), we believe that execution risk is embedded into the valuation. We expect shares to remain rangebound until the company can deliver a strong, sequential increase in net new cloud ARR that indicates pipeline durability and strength. Given that F1Q is a seasonally weak quarter for sequential cloud ARR growth – and coupled with low investor sentiment – we believe that net new cloud ARR in the ~$30mn range in F2Q can help alleviate investor concerns and sets the tone for a strong 2H. Maintain Outperform but move PT to $46 (10.5x EV / CY25 FCF & 20x CY25 EPS). Please see inside for our full recap."