Amphenol’s Wide Moat Will Help It Weather Communications Softness in 2023; $83 FVE

We maintain our $83 fair value estimate for wide-moat Amphenol after it reported a strong end to its fiscal year and provided tepid guidance for the first quarter. Amphenol is anticipating weak demand from cloud, enterprise, and telecom customers in its communications verticals as they digest inventory, which we expect to last through 2023. We aren’t worried about Amphenol’s ability to manage through a softer demand period and see its diversity and cost efficiency driving modest growth and strong profitability in 2023. Amphenol’s cost structure and ability to execute during downturns contribute to our wide economic moat rating. We see shares close to our fair value after the release, but further price declines may create a buying opportunity for long-term investors.