On Wednesday, Truist Securities adjusted its outlook on TE Connectivity (NYSE:TEL), a company specializing in connectivity and sensor solutions, by increasing its price target to $156 from the previous $151. The firm sustained its Hold rating on the stock. The revision follows the company's second-quarter results, which presented a mix of achievements and shortfalls. TE Connectivity reported revenues that slightly missed expectations in the transportation and industrial sectors; however, it surpassed margin projections.
The performance of the company's Communications segment, particularly in data centers and artificial intelligence (AI) markets, was highlighted as the primary contributor to the positive results and bookings. Despite the earnings per share (EPS) outperforming estimates, Truist Securities remains cautious, expressing a preference for other investments within the connectors and automotive end markets.
TE Connectivity's calendar year 2025 EPS forecast has been modestly increased to $8.43, up from $8.38. This adjustment is attributed to the anticipated benefits from the company's restructuring efforts. The new price target is based on a 18.5 times earnings multiple, which represents a 1.5 times discount compared to the 20 times earnings multiple of its industry peers.
The firm's analysis reflects a recognition of TE Connectivity's recent successes, particularly in the communications sector driven by AI, while also accounting for the broader challenges faced by the company. The updated price target and EPS forecast provide investors with the latest expectations from Truist Securities regarding TE Connectivity's financial trajectory.
In other recent news, TE Connectivity Ltd (NYSE:TEL). reported a robust third-quarter performance for the fiscal year 2024. The connectivity and sensor solutions leader saw its sales reach the $4 billion mark, signifying a 2% organic growth year-over-year. The adjusted earnings per share (EPS) climbed to $1.91, marking an 8% increase from the previous year. In addition, the company generated a record $2 billion in free cash flow over the first three quarters.
TE Connectivity's growth was driven by various segments, including the auto business in the transportation sector and AI applications in the communications segment. The company also mentioned its potential interest in future mergers and acquisitions that align with its markets and technologies.
Looking ahead, TE Connectivity expects a 9% rise in adjusted EPS for the fourth quarter and projects double-digit earnings growth for the full fiscal year. Despite some declines in the Industrial Equipment business and certain regional markets, the company remains optimistic about its growth prospects.
InvestingPro Insights
Following Truist Securities' updated outlook on TE Connectivity, current metrics from InvestingPro reveal a company that is trading at a favorable valuation with a P/E ratio of 14.23, indicating potential for investors looking for reasonable entry points in terms of near-term earnings growth. The company's commitment to shareholder returns is also evident, with a dividend yield of 1.72% and a notable track record of raising its dividend for 14 consecutive years. This stability is further underscored by TE Connectivity's low price volatility and its solid position as a prominent player in the Electronic Equipment, Instruments & Components industry.
InvestingPro Tips suggest that TE Connectivity operates with a moderate level of debt and has cash flows that can sufficiently cover interest payments, which may appeal to risk-averse investors. Additionally, the company is trading near its 52-week high, with the price at 98.12% of this peak, reflecting positive market sentiment. For those interested in further analysis, there are additional tips available on InvestingPro, which can be accessed with the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
The insights provided by InvestingPro, including a fair value estimate of $151.25 and a forthcoming earnings date on July 24, 2024, offer valuable context to investors considering TE Connectivity's stock. With analysts predicting profitability this year and a solid performance over the last twelve months, the company's financial health appears robust. For a deeper dive into TE Connectivity's performance and future prospects, readers can explore the additional 9 InvestingPro Tips available for the company.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.