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Northland Capital Markets upgraded shares of Teradyne (NASDAQ:TER) to Outperform from Market Perform in a note Tuesday, with the firm's analysts raising the price target for the stock to $126 per share.
The analysts told investors in a note that the firm expects increasing semiconductor test intensity in the future.
"TER is a well-run company that rarely misses estimates but operates in the volatile semiconductor market. We see several factors that will drive semiconductor test intensity in the future," they wrote.
One of those factors is the transition to 3nm at TSMC. "We believe the transition to 3nm at TSMC has started in earnest. The shift from 4nm to 3nm for mobile phone application processors increased the number of transistors from 16B to 19B. We expect more phones will make this transition in CY24, driving up test time and demand for TER testers," the analysts explained.
In addition, the firm believes HBM DRAM and DDR5 drive tester demand in an over-supplied DRAM market, while systems-in-package is expected to expand to the automotive market, which will "be an additional growth vector for TER over the next couple of years."
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