Teradyne: Piper Sees 2009 Recovery

With all the bad news in the DRAM and NAND flash memory chip market, such as the continued drastic drop in chip prices announced last week by Micron Technology (MU) — you’d be quite reluctant to buy the folks who sell the tools for DRAM. But today, Piper Jaffray chip analyst Gus Richard raised his rating on Teradyne (TER), which makes tools for both DRAM and NAND flash, to “Buy” from “Neutral,” and raised his price target to $16, from $14. That would be a nice 44% return, if the stock makes it there.

Richard says his numbers are going down for this fiscal year ending December, but going up for next year as Richard expects “a rebound in Q4 […]” He continues:

Near-term weakness in the flash market, coupled with a near term flattening of the company’s wireless business is conspiring to weaken the company’s prospects for Q3 [but] We expect a strong recovery […[ on the back of strong new product momentum in the company’s non semiconductor test business, DRAM test as well as the new products for the flash market.

Accordingly, Richard raised his ‘09 EPS estimate to 95 cents from 83 cents a share. He thinks Teradyne is worth 17x that 95-cent estimate, hence the $16 target.

Comments

[Daniel Jacome]

back end players should consolidate and improve their pricing clout like some of the front end guys in semi cap universe have done