On Tuesday, RBC (TSX:RY) Capital adjusted its outlook on Teradata Corporation (NYSE:TDC), a cloud-based data analytics company, by reducing its price target. The new price target is set to $44.00, down from the previous $48.00, while the firm maintained its Sector Perform rating on the stock.
Teradata's recent financial results presented a mixed picture, with the company reporting positive figures in overall revenue, recurring revenue, and profitability. However, the company did not meet expectations in cloud and total Annual Recurring Revenue (ARR), which fell short. The shortfall in cloud revenue was described as being due to a "couple million dollars" less than anticipated. Despite this, Teradata's management expressed confidence in their cloud pipeline.
The anticipation of a more significant portion of cloud revenue in the second half of the year remains, as the company did not alter its cloud guidance for the calendar year 2024. Additionally, customer churn was reported to be consistent with projections. A majority of the deals that did not materialize in the calendar year 2023 are still expected to be secured within the same year.
RBC Capital's decision to maintain the Sector Perform rating but lower the price target to $44 reflects the revised estimates based on the company's latest financial performance and future expectations.
InvestingPro Insights
Following RBC Capital's adjusted outlook on Teradata Corporation (NYSE:TDC), a deeper dive into real-time data from InvestingPro provides additional context for investors. Teradata's Market Cap stands at $3.71 billion, with a P/E Ratio of 60.97, reflecting a premium valuation in the market. However, the company's PEG Ratio, which measures the P/E relative to earnings growth, is more modest at 0.62 for the last twelve months as of Q4 2023.
Among the notable InvestingPro Tips, Teradata's management has been actively involved in share buybacks, demonstrating confidence in the company's value. Furthermore, analysts are optimistic about the company's profitability, predicting net income growth this year. These factors could be pivotal for investors considering the company's future prospects, especially when juxtaposed with the recent adjustments in price targets by RBC Capital.
For those looking to explore further, there are additional InvestingPro Tips available, which highlight both opportunities and risks, such as Teradata's high Price/Book multiple of 27.47 and the fact that short-term obligations exceed liquid assets. Investors can gain a more comprehensive understanding of Teradata by accessing these insights on InvestingPro, and can use the exclusive coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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