On Thursday, Oppenheimer reaffirmed its positive stance on Littelfuse Inc (NASDAQ:LFUS), maintaining an Outperform rating and a price target of $310.00. The firm's analysis suggests that despite the recent underperformance of LFUS shares compared to other short-cycle names, the potential for growth remains, given that sales and estimates are still trailing behind previous peaks.
The analyst noted that Littelfuse's pro forma peak sales in the Electronics segment were $1.583 billion in 2022, which already included the incremental revenue from the C&K acquisition, completed on July 19, 2022. This figure is higher than the reported sales of $1.493 billion for the same period. The projection for 2025 Electronics sales is set at $1.25 billion, which is 21% below the pro forma 2022 peak and 25% below the 2024 estimate.
The comparison to past sales takes into account the surge in demand following production ramp-ups post-shutdowns, which the analyst believes is not fully represented by the margin of decline. Furthermore, when comparing the projected 2025 Electronics sales to the previous peak in 2018 and including the C&K acquisition on a pro forma basis, the estimate reflects a 4% decrease.
The analyst's comments underscore the view that while the market may have reacted to the lighter fourth-quarter guidance and current earnings multiples, the underlying value of Littelfuse remains strong. The firm considers the current sales estimates conservative relative to the company's past performance and potential.
In other recent news, Littelfuse Inc., a global manufacturer of circuit protection, power control, and sensing technologies, exceeded sales and earnings expectations for its third-quarter 2024, reporting revenues of $567 million. This figure represents a 7% decrease from the previous year, attributed to challenging customer ordering patterns in Europe and China, as well as soft demand across various end markets. However, the company exhibited strong free cash flow and maintained solid net debt-to-EBITDA leverage.
Growth was observed in medical and data center applications, while passenger vehicle sales in China also saw an increase. Despite these positive trends, Littelfuse anticipates a sequential decline in fourth-quarter sales and a modest reduction in full-year sales, mainly due to product line pruning. The company's projections for Q4 sales range from $510 million to $540 million.
InvestingPro Insights
To complement Oppenheimer's analysis of Littelfuse Inc (NASDAQ:LFUS), recent data from InvestingPro provides additional context for investors. Despite the projected sales decline noted by analysts, Littelfuse maintains a solid financial foundation. The company's market capitalization stands at $5.93 billion, with a P/E ratio of 30.6, reflecting investor confidence in its future earnings potential.
InvestingPro Tips highlight Littelfuse's commitment to shareholder value, having raised its dividend for 15 consecutive years. This consistent dividend growth, coupled with a current dividend yield of 1.18%, may appeal to income-focused investors. Additionally, the company's ability to maintain dividend payments throughout this period demonstrates financial stability, even in challenging market conditions.
While the article discusses potential sales declines, it's worth noting that Littelfuse operates with a moderate level of debt and its liquid assets exceed short-term obligations. This financial flexibility could be crucial as the company navigates the current market cycle and positions itself for future growth.
For investors seeking a deeper understanding of Littelfuse's prospects, InvestingPro offers 9 additional tips, providing a more comprehensive analysis of the company's financial health and market position.
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