On Tuesday, TE Connectivity (NYSE:TEL) stock, received a vote of confidence as Jefferies initiated coverage with a Buy rating and a price target of $180. The firm highlighted TE Connectivity's significant market share and its advantageous position to capitalize on the ongoing shift towards electric vehicles (EVs).
According to the investment firm, TE Connectivity stands to benefit from the 'electrification' of various end markets, particularly the automotive sector. The analyst pointed out that electric vehicles present roughly double the content opportunity for TE Connectivity compared to traditional vehicles.
This is especially pertinent given the company's exposure to local Chinese original equipment manufacturers (OEMs), which are anticipated to drive a significant portion of the EV industry's growth in the near term.
Furthermore, Jefferies projects that TE Connectivity will not only experience top-line growth but also margin expansion. The firm expects structural cost actions to contribute to an increase in margins, forecasting more than a 300 basis point expansion through 2026.
The firm's financial model predicts that TE Connectivity could achieve almost $9.50 per share in earnings by 2026. Moreover, the analyst sees a potential for earnings to approach approximately $10 per share, bolstered by strategic capital deployment actions.
InvestingPro Insights
With TE Connectivity's (NYSE:TEL) stock receiving a recent Buy rating from Jefferies, current and potential investors might be interested in additional insights provided by InvestingPro. Notably, TE Connectivity has a proven track record of raising its dividend for 14 consecutive years, which may be appealing for income-focused investors. The company also trades at a low P/E ratio of 13.7, which is attractive relative to its near-term earnings growth. This positions the company as a potentially undervalued investment opportunity, given its prominence in the Electronic Equipment, Instruments & Components industry.
InvestingPro Data further indicates that TE Connectivity's market capitalization stands at $44.8 billion. The company has maintained a stable gross profit margin of 32.4% over the last twelve months as of Q1 2024, with operating income margins at 17.24%. This financial stability is complemented by a dividend yield of 1.8%, and the company's stock is trading near its 52-week high at 97.85% of that peak value. These metrics underscore the company's solid financial performance and may justify the optimistic outlook presented by equity analysts.
For investors looking for a deeper dive into TE Connectivity's financial health and future prospects, InvestingPro offers additional InvestingPro Tips that could further inform investment decisions. Currently, there are 11 more tips available on InvestingPro, including insights on the company's liquidity, debt levels, and profitability. To explore these valuable tips, interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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