It's been a good week for Teradata Corporation (NYSE:TDC) shareholders, because the company has just released its latest first-quarter results, and the shares gained 4.7% to US$22.65. It looks like a credible result overall - although revenues of US$418m were what the analysts expected, Teradata surprised by delivering a (statutory) profit of US$0.45 per share, an impressive 47% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, the current consensus, from the ten analysts covering Teradata, is for revenues of US$1.63b in 2025. This implies a small 4.1% reduction in Teradata's revenue over the past 12 months. Statutory earnings per share are expected to descend 12% to US$1.27 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.63b and earnings per share (EPS) of US$1.17 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

View our latest analysis for Teradata

The consensus price target fell 11% to US$26.25, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Teradata at US$35.00 per share, while the most bearish prices it at US$21.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. Over the past five years, revenues have declined around 1.4% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 5.4% decline in revenue until the end of 2025. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 12% per year. So while a broad number of companies are forecast to grow, unfortunately Teradata is expected to see its revenue affected worse than other companies in the industry.

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The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Teradata's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Teradata's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Teradata going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified  2 warning signs for Teradata (1 is potentially serious)  you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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