Bernstein: Teradata Positioned To Expand Recurring Revenue Growth

Data company Teradata Corporation TDC’s new subscription and rental offerings are likely to drive strong annual recurring revenue growth through 2020, according to Bernstein. 

The Analyst

Zane Chrane of Bernstein upgraded Teradata shares from Underperform to Market-Perform and raised the stock’s price target from $33 to $39.

The Thesis

New subscription offerings are likely to grow the portion of Teradata’s revenue that is recurring and lead to sustainable and consistent revenue streams over the long run, Chrane said in a Monday note. 

“We forecast Teradata can grow total [annual recurring revenue] at a 9-percent CAGR through fiscal 2020, driven largely by growth in the company's new subscription/rental offerings," the analyst said. 

Tetradata is also positioned to capture upside from increased market-wide capital expenditures spending, which is expected to grow at nearly 5 percent in 2018 and primarily trickle toward modernizing IT and cloud initiatives, Chrane said. 

Price Action

Tetradata shares were up more than 6 percent at $41.56 late in Monday's trading session. 

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