Teradata Corporation Stock is a Turnaround Play

Cloud data analytic solutions provider Teradata Corporation NYSE: TDC stock has nearly doubled in 2021 on the heels of a solid turnaround. The pandemic has accelerated the adoption of digital transformation. Surging social media engagements, ecommerce, work, learn and entertain-at-home trends have bolstered the need to store, manage and analyze oceans of data. To avoid the fate of legacy on-premise data storage providers, Teradata executed on the Cloud-First strategy to focus on cloud migration and bolster its scalable data analytics Vantage platform. The resulting resurgence of growth and wins from rival Snowflake NASDAQ: SNOW has shot shares straight up as the market sees a clear turnaround. Prudent investors looking for exposure can monitor shares of TDC for opportunistic pullback levels to build a position.

Q4 2020 Earnings Release

On Feb. 4, 2021, Teradata released its fiscal four-quarter 2020 earnings report for the quarter ending in December 2020. The Company reported an earnings-per-share (EPS) profit of $0.38, excluding non-recurring items, versus consensus analyst estimates for $0.25, a $0.13 beat. Revenues fell (-$0.06) year-over-year (YoY) to $491 million beating consensus analyst estimates for $476.02 million. The Company will invest 75% of R&D spend (over $200 million) in 2021 for cloud initiatives. Teradata ended full-year 2020 with $1.587 ARR, an 11% YoY growth rate. Subscription and cloud ARR accounted for $960 million and Public cloud accounted for $106 million, a 165% YoY increase. Gross margins rose 610 basis points YoY to 59.3%.

Conference Call Takeaways

Teradata CEO, Stephen McMillan, set the tone, “I’d like to highlight a handful of our public cloud wins. One of the world’s largest airlines committed to Teradata on Azure NASDAQ: MSFT for its next-generation analytics in the cloud. We were chosen ahead of Snowflake because of our low-cost price performance and our best bet technology… We signed a long-term agreement at a Fortune 100 insurer as it modernizes IT infrastructure. This competitive win against several cloud-native vendors came after the customer recognized that Teradata provides significantly higher value and quality at a significantly lower cost than others.” CEO McMillan went on to highlight several more high-profile wins against competitors. Another jab was taken at Snowflake highlighting a major global e-commerce marketplace recommitting to Teradata away from its original intended move to Snowflake.

Vantage Trial Program

The Company launched the Vantage Trial program. This free trial allows companies to upload data to use with preloaded ready-to-use examples to experience and compare the Vantage analytics program. Vantage is highly scalable across the top public cloud vendors enabling companies to leverage all the data, all the time. This enables customers, “… to achieve breakthrough business results from their analytics and our support of multi-cloud environments combined with new flexible pricing options, make it easy for customers to benefit from data analytics in the cloud as they unlock the value in the data assets.”

Raised Q4 Guidance

The Company raised its Q1 2021 guidance for EPS in the range of $0.38 to $0.40 versus $0.32 consensus analyst estimates. Public cloud annual recurring revenue (ARR) is expected to grow at least 165% YoY. For the full-year 2021, Teradata expects EPS ranging from $1.50 to $1.58 versus $1.52 consensus analyst estimates. Public cloud growth is expected to grow at least 100% YoY. Total ARR is expected to grow 5% to 9% YoY. Total revenue growth is expected to grow low single-digit percentages YoY. Prudent investors seeking a position in data analytics can watch for opportunistic pullback levels for exposure in TDC.

 TDC Opportunistic Pullback Levels

Using the rifle charts on the monthly and weekly time frames provides a full view of the price action playing field for TDC stock. The monthly rifle chart exploded higher through the $44.22 upper Bollinger Bands (BBs) near the $44.27 Fibonacci (fib) level. The monthly 5-period moving average (MA) is lagging way behind at $27.79 powered by the monthly stochastic mini pup. The monthly breakout triggered on the market structure low (MSL) above $25.66 in January 2021. The weekly rifle chart completed a full stochastic oscillation up and peaked to form a mini inverse pup slipping the 80-band. However, the earnings reaction spiked shares through the upper BBs at $42.25 as the 5-period MA continues to climb at $32.77. This sets up a make or break situation where the weekly uptrend continues higher if the stochastic can crossover back up through the 80-band, or a reversion back to the daily 5-period and 15-period MA occurs on the stochastic mini inverse pup oscillation down. Prudent investors can watch for opportunistic pullback levels at the $41.53 fib, $37.32 fib, $34.05 fib, $32.68 fib, and the $29.45 fib. The upside trajectories range from the $59.86 fib up to the $73.59 fib level.