Teradyne (TER) delivered what it called "blowout" quarterly results, alongside guidance that came in roughly 23% above expectations, driven by accelerating networking tester demand and strengthening momentum across its core semiconductor test business, Morgan Stanley said in a Wednesday note.

The brokerage said stronger networking tester demand drove sharp upward earnings-per-share revisions, lifting 2026 EPS to $6.31 from $5.33, 2027 to $8.74 from $7.38, and pointing to 2028 above $11.

Analysts surveyed by FactSet expect EPS of $6.33, $8.41, and $10.47 for 2026, 2027, and 2028, respectively.

Morgan Stanley sees Teradyne's semiconductor test revenue climbing 36% in 2026 and 23% in 2027 on stronger compute and networking demand, with networking now modeled at roughly 27% of 2026 SoC tester purchases and growth expectations raised sharply.

The bank said Teradyne's H1 weighted 2026 outlook appears conservative given limited visibility and expects growth to pick up as the year progresses.

It also highlighted rising semiconductor "test intensity," noting that testing is increasingly becoming a higher-value part of the chip manufacturing process.

The firm maintained its equal weight rating on the stock and raised its price target to $288 from $229.

Shares of the company were down more than 2% in recent trading.

Price: 275.85, Change: -7.13, Percent Change: -2.52