Apple Upside Hinted By Teradyne Earnings

Teradyne’s (Nasdaq: TER) earnings report last week was strong but probably important to many were hints to Apple (Nasdaq: AAPL) strength. Apple's quarter is reported on Thursday. Our guess is that Apple should be very bullish about strong trends. As for Teradyne, we moved to the sidelines after a nice run.

Teradyne had a strong quarter and a positive reaction. For us now Teradyne appears to be fully priced, so we moved it to Neutral Rating after a nice run from $77 in about a month. However, their comments also hinted that one of their biggest customers, Apple, is seeing strong demand.

The iPhone 12 with 5G has long been expected, so demand was expected to be high. However, the Teradyne report hints or confirms Apple's having a strong demand. Apple reports on Thursday after the close so we thought this could be timely.

Teradyne Update

We went to a Buy Rating on Teradyne about a month before earnings. The stock was around $77 a share vs. $90-plus today. At the time their historical trends pointed to a blow out quarter potentially which is why we were recommending it. We also thought the valuation had a 30+% upside at the time. Based on growth trends, we believed the company would exceed expectations. Last week, they reported earnings upside and had a big guide-up.

The stock hit our price target though and we exited the position in our model portfolio after a strong fast run. We told subscribers that despite the great results, the company’s guide and growth slowdown implied the stock was fully valued.

I want to review two things here about the Teradyne numbers below. The historicals and the go forward.

 

2019

2019

2020

2020

2020

2020

 

Q3

Q4

Q1

Q2

Q3

Q4

         

A

E

   

2295

     

3083

Revenues

582

655

704

839

819

720

1 yr gr%

2.6%

26.0%

42.6%

48.7%

40.8%

10.0%

2 yr gr

15.3%

34.4%

43.9%

55.7%

43.4%

36.0%

qtq

3.2%

12.5%

7.6%

19.1%

-2.3%

-12.1%

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I ...

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