UBS says sell Teradata with pivot to cloud seen being tougher than expected
Teradata (TDC) slumped Monday after UBS cut the stock to Sell ahead of the company's November 17 analyst day, arguing that the analytics and database provider may be facing a tougher-than-expected pivot to the cloud. TERADATA CUT TO SELL: UBS analyst Brent Thill downgraded Teradata to Sell on Monday while cutting his price target to $27 from $29. Thill argues that, while Teradata's upcoming analyst day will provide clarity on its transition to the cloud as well as a "much-needed" reset to analyst expectations, he sees downside risk to those estimates because of what he calls a miscalculation of the strain of the company's pivot: Teradata is certainly "taking the right steps" but also has "too many moving pieces to get comfortable with," and the stock's 17% run-up during the year also gives him pause. The analyst's customer checks show robust business and strong brand loyalty, but Thill anticipates continued "volatility" in financial performance due to stubbornly soft demand in Teradata's core business, "potentially cannibalistic" product launches, negative optics from the shift to subscription billing, and a "sustained price deflationary product mix" of consulting, cloud, and low-end offerings. PRICE ACTION: Shares of Teradata are down 5.2% to $29.38 in afternoon trading.