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Analyst sets new price target on Littelfuse stock, starts with Hold

EditorAhmed Abdulazez Abdulkadir
Published 04/09/2024, 05:43 AM

On Tuesday, Jefferies began coverage of Littelfuse Inc (NASDAQ:LFUS), assigning a Hold rating to the stock and establishing a price target of $260. The company, known for its electronic components, is recognized by the firm as a high-quality player in the connectivity market due to its robust margin profile. Littelfuse's gross margins stood at 38.8%, with EBITDA margins at 23.8% for the year 2023.

The firm notes that while Littelfuse is a key supplier of low-cost, mission-critical components, there are challenges ahead. Specifically, there is a lack of clear visibility regarding a demand rebound in 2024.

This uncertainty is partly due to the company's significant distribution exposure, which accounts for 60% of sales. The analyst anticipates a particularly weak first quarter, with sales projected to decline 15% year-over-year as inventory adjustments severely affect the company's revenue.

Despite these short-term concerns, Jefferies sees a sustained demand for Littelfuse's offerings. The company's products are vital in various growing sectors, including electric vehicles (EVs), data centers, and factory automation. These sectors are expected to underpin the company's mid-single-digit organic growth outlook over the long term.

Furthermore, the firm anticipates that Littelfuse will maintain its strategy of growth through acquisitions. This strategy has historically accounted for approximately 60% of cash generation, contributing to an estimated 5-7% growth.

Looking ahead, Jefferies projects that Littelfuse's earnings could potentially exceed $14 per share by 2026, factoring in the company's ongoing business strategies and market demand.

InvestingPro Insights

Recent data from InvestingPro shows Littelfuse Inc (NASDAQ:LFUS) with a market capitalization of approximately $5.87 billion and a P/E ratio that stands at 22.61, reflecting investor sentiment about the company's earnings potential. The company's commitment to shareholder returns is evident, as it has raised its dividend for 14 consecutive years, a sign of financial stability and confidence in future earnings. This aligns with the analyst's view of Littelfuse as a high-quality player in the connectivity market.

InvestingPro Tips indicate that despite analysts revising their earnings downwards for the upcoming period, Littelfuse has maintained dividend payments for 15 consecutive years and operates with a moderate level of debt, suggesting a balanced approach to financial management. Additionally, the stock generally trades with low price volatility, which may appeal to investors looking for stable returns in a turbulent market. For those looking to delve deeper into Littelfuse's financial health and future prospects, InvestingPro offers additional tips and insights. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of actionable financial data and expert analysis available.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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