Merrill Lynch Ups Teradyne to Neutral

Analyst Thomas Diffely says recent cost reductions combined with new products and improving industry fundamentals counterbalances his concerns for the semi test industry

Teradyne (TER ) reported a second-quarter loss of 23 cents per share. Merrill Lynch upgraded the stock to neutral from sell.

Analyst Thomas Diffely says the results were in-line with his forecast. He says recent cost reduction efforts combined with new product traction and improving industry fundamentals counterbalances his long-term structural concerns for the semi test industry, prompting him to upgrade the stock.

He says better-than-expected second-quarter orders ($349 million, vs. $325 million), accelerating third-quarter revenue projections (up 12% sequentially), combined with an industry rising off trough levels, should provide momentum into 2006.

Diffley narrowed his 50 cents 2005 loss estimate to a 35 cents loss, and raised 40 cents 2006 EPS forecast to 60 cents EPS.

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