Peaking of the semiconductor equipment cycle, relatively lower exposure to the memory segment and a negative mix of business will impact results in the next few quarters. As a result, we think that investors are likely to discount the product lineup, leaner cost structure and strong balance sheet.
We are therefore initiating coverage of TER shares with an Underperform rating. The forward P/E based on 2011 earnings is at a 35% discount to the peer group, much lower than the historical range of a 41% to 50% discount. We therefore believe there is significant downside potential.
TERADYNE INC (TER): Free Stock Analysis Report
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