TEL - TE Connectivity is added to Evercore Tactical Outperform List ahead of earnings

2023-07-17 06:42:58 ET

Evercore ISI added TE Connectivity ( NYSE: TEL ) to its Tactical Outperform List on Monday. The firm made the bull call on TE Connectivity just ahead of the earnings report due out from the automobile industry supplier on July 26.

Analyst Amit Daryanani and team expect a beat and raise quarter from TE Connectivity ( TEL ), driven by strength in automotive production, particularly from the European business.

"Given TEL's outsized Euro exposure (~45% of auto revenues) and strong production growth in the region, we think TEL geo-weighted should beat LMC numbers by 1.5-2.5% in FY23 (strong Q4)."

In terms of TEL's industrial business, although the step-down in equipment revenue last quarter was a surprise, the firm thinks current estimates are appropriately conservative, with strength in commercial air, medical, and energy offsetting any potential weakness in industrial equipment. Evercore ISI is also constructive on TEL's transportation margins, driven by a combination of pricing coming into effect and >30% incremental margins on strong production volume alongside lower inflationary input costs. Evercore ISI has an Outperform rating on TEL and am updated price target of $160.

Analysts in general have turned more cautious on TEL, with 10 of the last 12 EPS revisions to the downward side.

More on TE ConnectivityGroup:

• TE Connectivity: Impact Of Electrification Boom A Way Off
• More articles from Seeking Alpha analysts
• Growth metrics on TE Connectivity
• Seeking Alpha's Quant Rating for TE Connectivity

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