Symbol: HFH.KR

U.S.

Teradyne Inc (TER ) – Technology ($7.1B market cap) – Teradyne is a global supplier of automation equipment for test and industrial applications. The Company is engaged in the development and manufacturing of systems used to test semiconductors, wireless products, data storage, and complex electronics systems in the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace/defense industries.

• On April 24, the Company guided for Q2 2018 revenues of $505M at the midpoint (-4% q/q), which was well below consensus estimates of $694M at that time, as demand for mobile testing systems materially weakened during Q1 2018. Slower-than-expected node transition by Apple (from 10nm to 7nm processing technology) is the main reason for the soft outlook.
• Going forward, revenue growth is expected to decelerate. In the SoC Test market (smartphone-related), TER expects 2018 revenue of $2.2B-2.4B (-13% y/y at midpoint), versus previous expectations of $2.4B-2.8B (-2% y/y at midpoint). Given the lower SoC Test market estimate, TER expects H1 2018 revenues to be similar to H2 2018, compared with prior expectations that revenues will be back-end-loaded in 2018. This cautious outlook has resulted in downward revisions to 2018 and 2019 EPS consensus forecasts.
• Shares sharply breached their 40-WMA on above average volume following the disappointing outlook. Shares have been unable to rebound to original levels since August 2016.
• TER has a poor RS Rating of 30 and Datagraph Rating of 48.
• Shares are trading 25% off highs after topping in March 2018.
• Per consensus estimates, EPS growth is expected to decline 19% in 2018 and increase 36% in 2019; both figures were recently revised down.
• We anticipate shares will roll over after hitting resistance near the 40-WMA and may retest prior lows of ~$32.

Developed

Olympus Corp. (OLYC.JP ) – Health Care ($12B market cap) – The Company is engaged in medical, life science, industrial, and imaging businesses. The medical segment makes up 78% of total revenue.

• The Company reported Q4 FY 2018 results this week. Revenue was flat y/y, while net profit declined 44%. Management indicated that the targets from their five-year plan announced in 2016 will be postponed for two to three years. They revised revenue growth 10% lower and operating profit 9% lower than previously expected. The Company cited factors that led to expected under-delivery of products, including a more stringent regulatory environment and a faster-than-expected research budget decline in both the U.S. and Europe.
• The stock gapped down 3% on the results and is now trading below both its 10- and 40-WMA. The stock’s RS line is hitting a five-year low with an RS Rating of just 14. Its A/D Rating declined from C to D+ this week.
• We believe shares will continue to hit resistance along the 200-DMA and lag the Japanese market. Potential near-term downside is to August 2017 lows of ¥3,600 (-8%).