NEW YORK (TheStreet) -- A mere six weeks after downgrading Teradata (TDC) to equal weight, Morgan Stanley has grown even more bearish. The investment firm cut its rating of the big data tech company to "underweight" with a price target of $36.
"Growth slowed in 2013 and is unlikely to [re-accelerate] in the foreseeable future due to cyclical and secular headwinds," it wrote.
The bank sees potential challenges ahead as cheaper cloud services muscle into the data storage space, and as deals with larger corporate customers lead to inconsistent and delayed returns. Increased competition will also lead to growth and pricing margin pressure and Morgan Stanley doubts the company has enough traction in the mid-market to survive the threat.
"With the exception of Teradata's Aster Data and Hadoop business, which makes up $30 million, or 1% of revenue, the majority of revenue is at risk to customers looking for cheaper alternatives, which is likely to limit [Enterprise Data Warehouse] (EDW) growth," the bank said.
In October, the Dayton, Ohio-based business forecast full-year net income between $2.70 and $2.80 a share, well below previous consensus from Thomson Reuters of $3.05 a share.
Shares have tumbled 6.3% during Wednesday trading to $42.50. Year to date, the stock has fallen 31.3%.
TheStreet Ratings team rates Teradata Corp as a Hold with a ratings score of C+. The team has this to say about its 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, weak operating cash flow and deteriorating net income."