Investors were cautiously optimistic about starting today’s session and seemed relieved to put September behind them. It was a brutal past month; the S&P 500 finished down 4.8%. The Dow fell 4.3%, and the Nasdaq Composite sank 5.3%. Although the headwinds from last month remain mostly unsettled, analysts remain mostly optimistic heading into October.
“As we wrap up the third quarter and look ahead, investors will likely need to remain nimble as the economic recovery continues in a zig-zag,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.
Our trade alert for today features a leading provider of analytics solutions. According to analysts, a recent pullback may have created an entry point. Find out why now may be the time to get in on this one below.
Leading provider of hybrid cloud analytics software, Teradata Corporation (TDC), serves various industries such as financial services, government, retail, and telecommunications through its primary offering, an analytics platform called Teradata Vantage. Recent enhancements to the platform could lead to increased demand in the near term.
TDC stock has gained more than 100% in price this year and seems to have plenty of upside left to deliver. Over the past month, the stock has seen a 12.5% upward revision in broker ratings. Among the analysts who see a promising future for the stock is Morgan Stanley’s Katy Huberty. The analyst recently upgraded TDC to Overweight from Equal Weight, raising the price target from $55 to $66, reflecting a 26% upside.
After recent meetings with Teradata management, Huberty says she is more confident in the long-term model and tells investors that a shift in engineering spends and go-to-market resources increase her confidence in Cloud Annual Recurring Revenue or ARR and growth in new customers.
The analyst contends, “now is the time to buy the stock,” as the recent pullback on weaker 2022 guidance at the company’s analyst day related to revenue pull forward has created an entry point ahead of what she views as an inflection in Teradata’s “underappreciated” Cloud business.
Analysts expect TDC’s EPS and revenue to increase 50.4% and 4.6%, respectively, year-over-year to $1.97 and $1.92 billion in its fiscal year 2021. Of 10 analysts offering recommendations for the stock, 5 rate TDC a Buy, 4 call it a Hold, and only 1 calls the stock a Sell. A median 12-month price target of $62.50 represents a 9% increase from its current price.
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