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Article Thesis
I covered Teradyne (NASDAQ:TER) in November last year, when I estimated a Fair Value of $130.8, based on their mid-term model with 13% to 20% estimated revenue growth through 2026. I found a strong economic moat in their
Teradyne: Tariffs, Short-Term Headwinds, But Undervalued
Summary
- Initiated a position in Teradyne at $108 due to its narrow to strong economic moat, despite not being significantly undervalued, and used a partial hedge strategy.
- Teradyne's revised revenue growth outlook for 2025 is 5%-10%, with mid-term growth expected at 12%-18% through 2028.
- Base case DCF derived Fair Value is $115.7 (33% upside from the current price); if they miss their mid-term targets by 20%-30%, Fair Value would be $90.
- Position adjustment according to economic moat and rating and a partial Covered Call helped me get ~9% return in ~3 months, even with the stock down ~20%.
"Fundamental Options" would be the title of my investing style, because I combine fundamental analysis with the power of options. I use Fundamental Analysis to quantitatively and qualitatively assess individual stocks and ETFs, and I pursue various strategies: Income oriented, especially BDCs, but also Utilities; Growth At A Reasonable Price, especially Tech, having a background in Software Development; Deep Value, based on Discounted Cash Flow and / or other industry specific valuation methods; Dividend Aristocrats.While I usually invest in stocks for long-term, I also have 20-25 strategies involving options that I use for various purposes: hedging stocks; bullish stock / ETF substitutes with improved risk / reward; neutral trades; trading volatility; earnings-related trades.Teaching is another passion of mine, I used to be a formal on non-formal teacher or coach in different areas of life, including authoring of a free local investing newsletter in the last years.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of TER either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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