Morgan Stanley analyst Erik Woodring maintained a Hold rating on Teradata (TDC – Research Report) today and set a price target of $29.00.
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Erik Woodring has given his Hold rating due to a combination of factors surrounding Teradata’s current and expected performance. The company’s fourth-quarter results revealed certain weaknesses, such as disappointing total revenue and Cloud ARR figures, despite some positives like improved gross margins. Management has shared an optimistic outlook for 2025, emphasizing improved retention rates, technological advancements through partnerships, and an anticipated return to recurring revenue growth by 2026.
Nevertheless, cautious guidance for the first half of 2025, with potential declines in key metrics and gross margin compression, suggests a challenging path ahead. Although the management’s conservative guidance provides some reassurance, the need for Teradata to rebuild credibility with investors and the company’s valuation at less than 10 times its 2025 free cash flow make a compelling case for a Hold rating until further confidence in the company’s trajectory is established.