Amphenol’s Strong Q4 Reflects Positive Long-Term Fundamentals; Raise Fair Value Estimate to $81

We are raising our fair value estimate for Amphenol to $81 per share from $62 per share after lowering our cost of equity assumption for the firm to reflect increased confidence in its execution and cost management through market cycles, which also underpins our narrow economic moat rating for the firm. We think Amphenol's performance through COVID-19 is but one example of its ability to profitably grow in the long run regardless of the market backdrop. Amphenol capped off 2021 with a blowout fourth quarter, exceeding guidance and our expectations, albeit while providing guidance for a sequentially weaker first quarter. Amphenol’s top and bottom lines registered an inorganic benefit from its recent Halo Technologies acquisition but even organically would’ve posted a strong top-line beat. We think the relatively weak first-quarter guide reflects that the fourth quarter benefited from some pulled forward demand, but we continue to see an acceleration of secular trends toward electrification and connectivity that we believe will benefit Amphenol reliably in the long run. Shares look fairly valued to us currently.