On Tuesday, JPMorgan updated its outlook on Amphenol Corporation (NYSE:APH) shares, elevating the price target to $80 from the previous $65, while reaffirming an Overweight rating on the stock.
The adjustment reflects the firm's confidence in the company's continued growth, fueled by artificial intelligence (AI) advancements and a strategic mergers and acquisitions (M&A) approach.
Amphenol's stock has seen a significant uptrend, boasting a year-to-date (YTD) increase of 34%, outperforming the S&P 500's 17% rise over the same period. This performance has led to the stock trading at a 38 times next twelve months (NTM) earnings multiple, which suggests investors are anticipating a structural shift in the company's medium-term growth rate.
The positive outlook is further supported by expectations of sustained double-digit revenue growth through 2026, underpinned by robust performance in the IT Datacom segment and the recent acquisition of CommScope's Mobile Networks business, set to start contributing in the second half of 2025.
While some non-AI end-markets are predicted to experience muted growth in 2024 due to challenging macroeconomic conditions, a cyclical recovery is anticipated in 2025, potentially aligning with lower interest rates.
Amphenol's strong M&A pipeline is also expected to significantly enhance earnings annually, as the company leverages its execution strengths on a larger scale. This strategic approach is projected to translate incremental revenue into bottom-line growth at margins comparable to the corporate average.
JPMorgan's revised revenue and EPS forecasts for Amphenol call for a mid-teens revenue compound annual growth rate (CAGR) and a high-teens EPS CAGR from 2023 to 2026.
Despite concerns about near-term premium valuation and conservative guidance for the upcoming quarter, particularly with the full-quarter consolidation of the margin-dilutive CIT, the firm does not see these as indicative of long-term performance or potential upsides. The new December 2025 price target of $80 is based on valuing the company's projected 2026 EPS of $2.45 at a 33 times P/E multiple.
In other recent news, Amphenol Corporation experienced significant developments. The firm's earnings per share (EPS) consistently traded higher for the past four quarters, attributed to strong growth in the artificial intelligence (AI) sector and robust growth in the automotive segment.
The company also completed a two-for-one stock split, aiming to make shares more accessible to a broader investor base. Furthermore, Amphenol finalized the acquisition of Carlisle Interconnect Technologies (CIT), a development expected to contribute significantly to revenue.
Analyst firms such as Baird, Stifel, and Evercore ISI have responded to these developments. Baird increased the price target for Amphenol shares to $72, citing strong AI sector growth. Stifel adjusted its outlook on Amphenol, reducing the price target to $66 but maintaining a Hold rating.
The firm's revised model now includes a $620 million revenue contribution from CIT for this year. Evercore ISI increased its revenue estimate for Amphenol to $14.0 billion, with the company's EPS estimate for 2024 revised to $1.68, reflecting a contribution from CIT.
Several other analyst firms have also shown optimism. Citi maintained a Buy rating on Amphenol, increasing the price target to $160. Truist Securities raised its price target to $149, factoring in the CIT acquisition. These are the recent developments for Amphenol Corporation.
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