NEW YORK (TheStreet) -- Teradata Corp. (TDC - Get Report) shares are down -2.3% to $43.58 in early market trading on Monday after being downgraded to "market perform" from "outperform" by analysts at JMP Securities.
The firm believes that increased competition from alternative data platforms like Hadoop, Redshift and NoSQL will stymie the growth of the analytic data solutions provider.
"While we acknowledge that Teradata is not an "expensive" stock, we simply believe that the "price per terabyte" trendline is downward sloping and that Teradata may struggle to grow, and with the stock up 16% off its 52-week lows, we think now is a good time to step to the sidelines," said analysts.
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TheStreet Ratings team rates TERADATA CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TERADATA CORP (TDC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 16.6%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TDC's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TDC has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
- TERADATA CORP has improved earnings per share by 5.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TERADATA CORP reported lower earnings of $2.27 versus $2.44 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.27).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the IT Services industry and the overall market on the basis of return on equity, TERADATA CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- TDC has underperformed the S&P 500 Index, declining 20.48% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: TDC Ratings Report