TE Connectivity (TEL) PT Raised to $180 at JPMorgan

JPMorgan analyst Samik Chatterjee raised the price target on TE Connectivity (NYSE: TEL) to $180.00 (from $169.00) while maintaining a Neutral rating.

The analyst comments "TE Connectivity shares have only risen +7% YTD relative to the broader market up +15%, with multiple drivers keeping a lid on investor sentiment despite a valuation multiple that would otherwise drive heightened interest in the shares as TEL remains one of the few hardware companies that are still trading closer to their long-term valuation multiples rather than a strong premium. We believe that downward pressure for the shares stem from - 1) Declining auto production outlook, with 2024 production estimate declining by 1.6 mn units over last 90 days as well as declining commercial transportation market, 2) Industrial outlook, although stabilized, is not showing any material greenshoots to point towards a strong recovery, 3) Impact of potentially higher tax rate remains yet to quantified. Relative to segments, the outlook for Communication Solutions remains positive with $700 mn of the revenue TAM relevant to AI connectors in 2024 expected to increase to ~$1.4 bn in 2025, but broader investor perception remains that TE Connectivity remains a much smaller player relative to peer company Amphenol in this end-market and an increase in the outlook can materially improve investor perception for TEL’s AI leverage. We expect F3Q results and F4Q guide largely in line with consensus, with limited upsides as the macro backdrop remains challenging. While the company has outlined that recent cost actions can enable a strong incremental margin on the volume recovery in 2025, our forecasts for FY25 still moderate on expectations of incremental headwinds to revenue growth. We establish our Dec 2025 price target of $180 vs. Dec 2024 price target of $169 prior, based on applying a 20x P/E to our FY26 EPS estimates."

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