On Wednesday, TE Connectivity (NYSE:TEL), a global industrial technology company, maintained its Perform rating according to Oppenheimer, following the company's fiscal third-quarter earnings report.
TE Connectivity reported an adjusted earnings per share (EPS) of $1.91, which is an 8% increase year-over-year and slightly above the $1.86 estimate and the company's own $1.85 guidance. This increase came despite a negative impact of $(0.18) from foreign exchange and tax rates, versus the $(0.15) expected.
Sales for the quarter reached $3.98 billion, a slight decline of 0.5% year-over-year but consistent with expectations and the company's guidance of approximately $4.0 billion. The sales figure also represented a 2% organic growth, aligning with the forecast.
Adjusted operating margin (OM) was reported at 19.3%, a substantial 200 basis points improvement compared to the estimated 18.5%. Adjusted operating profit (OP) was $766 million, an 11% increase from the previous year, surpassing the $740 million estimate.
The book-to-bill ratio, which measures order backlog against billed sales, was 1.04 times, indicating more orders were received than billed during the quarter. This is an increase from the 0.99 times ratio during the same quarter of the previous fiscal year. Notably, the Communications segment saw a significant rise in orders, with a 96% year-over-year increase, reaching a book-to-bill ratio of 1.55. The Transportation and Industrial segments recorded ratios of 0.94 and 1.01, respectively.
Looking ahead to the fiscal fourth quarter of 2024, TE Connectivity forecasts sales of approximately $4.0 billion, indicating a slight decline of 1% but with an expected 1% organic growth. This is slightly below the analyst's projection of $4.14 billion and the $4.11 billion consensus.
The company also anticipates an adjusted EPS of around $1.94, compared to the $1.99 estimate and the $1.93 consensus. Year-to-date free cash flow (FCF) was robust at $1.98 billion, with $867 million generated in the third quarter alone, positioning the company well against its guidance of greater than 100% free cash flow to adjusted net income and compared to the full-year estimate of $2.41 billion.
In other recent news, TE Connectivity has been the focus of multiple analyst updates. JPMorgan raised the company's stock target to $180.00 while maintaining a Neutral rating, attributing the adjustment to factors including a declining auto production outlook and a stagnant industrial outlook. The firm also highlighted potential growth in TE Connectivity's Communication Solutions segment.
Similarly, Jefferies increased its price target for TE Connectivity to $190.00, anticipating strong third-quarter earnings influenced by adjustments in global automotive forecasts and expected recovery in the demand for Industrial Equipment.
BofA Securities also raised its price target for TE Connectivity to $170, citing the company's ability to grow its content per vehicle and maintain overall growth. The firm anticipates the company to report revenues of $4.0 billion and earnings per share of $1.85 for the fiscal third quarter.
On the other hand, Baird adjusted its price target down to $162, anticipating a quarter similar to the previous one, where TE Connectivity met expectations but issued lower forward guidance.
Lastly, Evercore ISI maintained an Outperform rating, suggesting that divesting TE Connectivity's medical business could benefit the company strategically. The firm later increased its price target to $175, citing growth prospects in AI and EV markets. These are the recent developments for TE Connectivity.
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