Cloud services and analytics company Teradata Corporation (TDC) is down 35% in the past year, with shares taking a dive after earnings last week. One trader sees a rebound in the months ahead.
That’s based on the April $30 calls. With 59 days until expiration, 3,748 contracts traded compared to a prior open interest of 115, for a 33-fold rise in volume on the trade. The buyer of the calls paid $0.30 to make the bullish bet.
Teradata shares recently traded for just under $25, so the stock would need to rally by $5, or 20%, for the option to move in-the-money. Teradata shares sit right above their 52-week low of $22.73.
Operationally, Teradata has had a mixed year. Earnings are up over 167%, but revenues were flat overall. Without revenue growth, further earnings growth will be tougher to pull off.
Following the recent drop in shares, Teradata now trades for just under 10 times forward earnings.
Action to take: Shares had a similar decline in 2024, and rebounded in the months ahead. Given the company’s fundamentals, this could be a short-term rebound play for value-oriented investors. From here, the stock could easily see a low double-digit gain.
For traders, the April $30 calls are well positioned for a post-earnings-slump rebound in the months ahead. The options are inexpensive enough that they can likely deliver a high double-digit return.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.