) to sell from hold.
Analyst Timothy Arcuri says he assumed coverage of the semiconductor testing-equipment maker, adding that his "sum-of-parts" analysis suggests the stock is overvalued. He says he prefers late cycle or derivative plays with attractive valuation.
Arcuri says the jettisoned, lower-margin Teradyne Connection Systems business injects operating leverage into his model, although much of this is already factored into current expectations. He notes key issues for the stock remain increased traction of a new product pipeline, improved margins on the non-semiconductor test side, and further consolidation of the overcrowded, price-competitive automatic test equipment market.
Arcuri upped the $1.40 2004 EPS estimate to $1.41, and upped the $1.21 2005 estimate to $1.50. He also cut the $30 target to $20.