Teradata Corp. shares fell to the lowest level since 2010 as the database manager and analytics company was downgraded by analysts at JMP Securities LLC.
Teradata lost 2.8 percent to $37.48 at 1:37 p.m. in New York, the most in more than a month. The shares have tumbled 20 percent from a high in February amid disappointing earnings and concerns over growing competition.
“We feel Teradata’s current valuation underestimates the difficulties the company is facing and will likely continue to face in the coming years,” JMP analysts led by Greg McDowell wrote in a note to clients. Demand for competing data platforms “is accelerating at the expense of Teradata.”
Teradata supplies software and hardware to support big data, the vast amount of information amassed by businesses that requires powerful computers to store and analyze it. The company was spun off from ATM maker NCR Corp. eight years ago and before that was part of AT&T Inc.
Teradata investor Matrix Asset Advisors Inc. last month issued a letter for the fourth time calling on the board to consider a sale of the business. Matrix reiterated that the company should be part of a bigger enterprise, citing Teradata’s May 7 earnings report, in which first-quarter sales missed analysts’ average projection and the company gave a full-year profit forecast at the low end of estimates.
Shares of Dayton, Ohio-based Teradata dropped 7 percent on the disappointing earnings report. That was welcome news to short sellers, who had piled into Teradata in record volume.
Teradata will report 2015 earnings of $2.40 a share, according to JMP, down from the firm’s earlier estimate of $2.48. JMP downgraded the shares to market underperform from market perform. The firm has a price target of $30, 20 percent below where the shares currently trade.
The decline in earnings expectations reflects increased competition from other data platforms, including Amazon.com Inc.’s cloud data warehousing, the analysts wrote.
“We believe the momentum of alternative data platforms is unstoppable,” according to the note. “The end result of this shift is that companies, such as Teradata, are increasingly surrounded by vendors that can achieve similar scale with security, reliability, and extensibility at a much lower cost.”