It's been a mediocre week for Teradata Corporation (NYSE:TDC) shareholders, with the stock dropping 19% to US$24.83 in the week since its latest full-year results. Teradata reported US$1.8b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.16 beat expectations, being 9.5% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus, from the ten analysts covering Teradata, is for revenues of US$1.64b in 2025. This implies a small 6.4% reduction in Teradata's revenue over the past 12 months. Statutory earnings per share are expected to shrink 8.5% to US$1.09 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.69b and earnings per share (EPS) of US$1.24 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
The consensus price target fell 7.0% to US$30.70, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Teradata analyst has a price target of US$37.00 per share, while the most pessimistic values it at US$25.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that Teradata's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 6.4% to the end of 2025. This tops off a historical decline of 1.2% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 12% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Teradata to suffer worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Teradata. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Teradata's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Teradata going out to 2027, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Teradata that you need to take into consideration.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
