Analysts have raised their Teradata fair value estimate from $29.00 to about $35.73, citing updated assumptions for revenue growth, profit margins, discount rate, and future P/E that are reflected in a series of higher price targets across major research firms.
Analyst Commentary
Recent research updates cluster around higher price targets for Teradata, with several firms lifting their views by single to low double digit dollar amounts. These moves feed directly into the higher fair value estimate, but the tone across the Street is not one sided.
Bullish Takeaways
- Bullish analysts are pointing to a set of updated assumptions on revenue growth, margins, and discount rate that support higher valuation inputs, which is reflected in multiple price target increases of between $2 and $13.
- The series of upward revisions, including moves of $13, $12 and $7, suggest growing confidence that Teradata can execute against its current plans well enough to justify a higher P/E than previously used in models.
- Some research points to a favorable setup for software generally into 2026, with comments around stable macro conditions and IT spending, which supports using stronger sector multiples in Teradata valuation work.
- Even where ratings remain cautious, the step up in price targets, such as the move to $27 from $24, indicates that downside targets are being reset higher as analysts revisit their longer term forecasts.
Bearish Takeaways
- Despite the higher targets, at least one firm keeps an Underweight rating, signaling that some bearish analysts still see better risk reward elsewhere, even as they acknowledge the need to lift their numbers.
- The reliance on a broadly favorable software backdrop for 2026, including stable macro and IT budgets, introduces sensitivity to any change in those conditions that could pressure the multiples used in Teradata models.
- Higher targets built on revised assumptions for growth and margins leave less room for execution missteps, meaning any shortfall against those updated assumptions could create valuation pressure.
- With multiple price target increases occurring over a short window, there is a risk that expectations for operational delivery and P/E outcomes move ahead of what Teradata can practically achieve on its current trajectory.
What’s in the News
- Teradata issued earnings guidance for the first quarter of 2026, targeting total revenue growth in the range of 1% to 3% year over year and GAAP diluted EPS of US$0.36 to US$0.40 per share (corporate guidance).
- For full year 2026, the company guided to a total revenue range from a 2% decline to flat year over year and GAAP diluted EPS of US$1.26 to US$1.36 (corporate guidance).
- From October 1, 2025 to December 31, 2025, Teradata repurchased 5,342,137 shares, or 5.7% of its shares, for US$140 million, bringing total repurchases under its February 9, 2012 buyback to 107,579,431 shares, or 87.94%, for US$3,995.79 million (buyback tranche update).
- Between November 17, 2025 and December 31, 2025, the company reported no share repurchases under the buyback program announced on November 18, 2025 (buyback tranche update).
- On February 10, 2026, Teradata announced a cooperation agreement with Lynrock Lake LP that includes adding Melissa Fisher to the Board as a Class I director by March 1, 2026 and working with Lynrock Lake on an additional independent director candidate for after the 2026 annual meeting, in exchange for support of the company’s full director slate and certain standstill and related provisions (investor activism agreement).
Valuation Changes
- Fair Value: Raised from $29.00 to about $35.73, a move of roughly 23% that reflects the latest modeling updates.
- Discount Rate: Trimmed slightly from 9.10% to about 8.89%, signaling a modest adjustment to the required return used in the analysis.
- Revenue Growth: Assumption lifted from about 7.16% to a very large figure of roughly 86.58%, indicating a much more optimistic top line outlook in the new model.
- Net Profit Margin: Increased from roughly 9.47% to about 10.14%, pointing to a slightly stronger earnings profile on each dollar of revenue.
- Future P/E: Raised from about 21.40x to roughly 22.67x, implying a modestly higher valuation multiple applied to expected earnings.
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