Teradata Downgraded On Competition From RedShift And Hardoop By CLSA

Teradata Corporation’s (NYSE: TDC) core business is likely to continue to be under pressure from open source and Data Warehouse as a Service [DWaaS] alternatives, CLSA’s Ed Maguire said in a report. He downgraded the rating on the company from Buy to Underperform, while reducing the price target from $35 to $29.

“Teradata’s reliance on large deals, perceived higher cost and perpetual license model are secularly challenged by the shift to subscription-based buying, and for lower-cost DWaaS offerings and open-source alternatives like Hadoop,” analyst Ed Maguire wrote.

New Class Of Competition

So far, Teradata has been able to withstand competition from new entrants into the data warehousing market. Maguire pointed out, however, that Amazon.com, Inc’s (NASDAQ: AMZN) RedShift and Hadoop represented “a new class of competition” and these had come at the “direct expense of” companies like Teradata.

While Teradata has a Big Data business, this does not fully offset the company’s exposure in data warehousing, the analyst commented. He added that although the new CEO Victor Lund is focusing transformation efforts to Teradata’s unique strengths, “the scope of changes required and the structural headwinds will require time for success.”

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