On Monday, Baird increased the price target for Amphenol Corporation (NYSE:APH) shares to $72 from $68, while maintaining an Outperform rating on the stock.
The firm's decision comes as Amphenol has seen its shares rise significantly year-to-date, outperforming the S&P 500 with a 42% gain compared to the broader market's 17% increase.
The analyst at Baird highlighted Amphenol's consistent trading higher on earnings per share (EPS) for four consecutive quarters. The company's performance is attributed to several factors, including strong growth in the artificial intelligence (AI) sector. IT Datacomm sales are expected to see a double-digit sequential increase, and the analyst anticipates potential upside to this projection.
Amphenol's automotive segment also displayed robust outgrowth in the previous quarter, with high-teen percentage gains. This growth was driven by strength in communications, which helped to balance out a moderation in electric vehicle (EV) tailwinds. Despite conservative sequential guidance for a modest decline, year-over-year strength is expected to persist into the second quarter of 2024.
The company's Commercial Air and Military/Defense sectors are anticipated to maintain momentum as well. Additionally, signs of stabilization in the Industrial sector would be positively received by investors.
The recent acquisition of Carlisle Interconnect, which closed in late May, is not expected to impact the second quarter's EPS but will be included in the third quarter of 2024 guidance. The underlying EBIT margins for Carlisle Interconnect are projected to be in the low double-digits, and non-recurring charges are likely to be excluded from guidance.
Baird's analysis suggests that guidance will be a crucial factor for Amphenol, as the company typically surpasses current-quarter expectations. In the past, guidance has bracketed Wall Street's consensus for the second to fourth quarter of 2023 but positioned consensus at the low end of the guidance last quarter.
This pattern offers an opportunity to gauge investor expectations in light of the company's year-to-date performance versus its traditionally conservative guidance approach.
In other recent news, Amphenol Corporation has made significant strides in its business operations. The company completed a two-for-one stock split and adjusted its dividend to $0.11 per share, aiming to make shares more accessible to a broader investor base. The company also finalized the acquisition of Carlisle Interconnect Technologies (CIT), a development that analysts predict will contribute significantly to revenue.
Stifel has 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 and a one-cent increase in earnings per share.
Meanwhile, Evercore ISI has increased its revenue estimate for Amphenol to $14.0 billion, with the company's earnings per share (EPS) estimate for 2024 revised to $1.68, reflecting a contribution from CIT.
Several analyst firms have responded to these developments with optimism. Citi maintained a Buy rating on Amphenol, increasing the price target to $160, while Truist Securities raised its price target to $149, factoring in the CIT acquisition.
Baird also increased its price target to $137, citing growth drivers such as AI sales and performance in the automotive sector. These are the recent developments for Amphenol Corporation.
InvestingPro Insights
Amphenol Corporation's impressive year-to-date performance is further illuminated by real-time data from InvestingPro. With a robust market capitalization of $83.92 billion, the company's financial health is underscored by a high P/E ratio of 41.49, reflecting investor confidence in its earnings potential. Additionally, Amphenol's commitment to shareholder returns is evident, as it has raised its dividend for 12 consecutive years and maintained dividend payments for 20 consecutive years. The company's stock has also experienced substantial growth, with a 66.51% return over the past year, trading near its 52-week high at 98.62% of the peak.
InvestingPro Tips highlight Amphenol as a prominent player in the Electronic Equipment, Instruments & Components industry, with a reputation for low price volatility and a strong return over the last three months. These characteristics, coupled with the company's moderate level of debt and the fact that its liquid assets exceed short-term obligations, paint a picture of a financially stable and reliable investment. For those looking to delve deeper into Amphenol's financials and future prospects, InvestingPro offers additional tips. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to even more insights to inform their investment decisions.
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