Company Reports

We have raised our fair value estimate for shares of Amphenol to $100 per share, from $87, after lifting our forecast for the firm’s data center and artificial intelligence sales. Amphenol crushed its guidance for the first quarter, and its second-quarter forecast was above our expectations. We credit this in large part to success in the data center market, where Amphenol is benefiting from data center buildouts and increasingly selling into AI architecture. All told, we think AI will lift Amphenol’s growth profile in the communications market in the medium term. Amphenol posted excellent profitability, too, even for the firm’s own high standards. We remain extremely positive on Amphenol’s structural ability to drive diversified growth and the best profitability of its peer group, which adheres to our wide moat rating. Still, we continue to see shares as overvalued. Amphenol often trades at a premium for its stellar execution, but we think shares are assuming overly ambitious long-term growth. We would remain eager buyers on a pullback in the share price.

We think Amphenol is a differentiated connector supplier, an excellent operator, and an exceptional steward of shareholder capital. Amphenol competes against myriad competitors in the fragmented electrical component industry, but its broad array of end markets allows it to expand the top line even amid an individual market downturn. We also think the firm’s singular ability to effect cost controls gives it the highest operating margins of its peer group, and allows it to quickly bring its numerous acquisitions up to firmwide profitability.

We raise our fair value estimate for Amphenol to $87 per share, from $83, after beating our fourth-quarter expectations on all fronts. Amphenol’s strong top-line performance in the quarter exemplifies its strong end market diversity, in our view, and continued share gains. We also laud the firm for terrific quarterly profitability once again, showing its structurally low cost structure compared with peers that supports its wide economic moat. We continue to see shares as overvalued, despite our raised valuation. Shares hit all-time highs following the firm’s fourth-quarter release, and we recommend investors wait for a pullback to commit capital to the blue-chip component supplier.

We think Amphenol is a differentiated connector supplier, an excellent operator, and an exceptional steward of shareholder capital. Amphenol competes against myriad competitors in the fragmented electrical component industry, but its broad array of diverse end markets allows it to grow the top line even in the midst of an individual market downturn. We also think the firm’s unique ability to effect cost controls gives it the highest operating margins of its peer group, and allows it to quickly bring its numerous acquisitions up to firmwide profitability.

We maintain our $83 fair value estimate for shares of wide-moat Amphenol after the firm reported solid third-quarter results and guided for a decent fourth quarter. Amphenol continues to perform well amid mixed underlying end market results, which we see as evidence of the firm’s ability to grow content in end products and its operating resiliency. Electric vehicles, or EVs, continue to be a significant driver of growth for Amphenol, and we’re starting to see green growth shoots from artificial intelligence, or AI. We remain confident in Amphenol’s long-term growth drivers and its terrific structural profitability that undergirds our wide moat rating. We aren’t overly concerned about our expectation for a modest top-line decline this year as we see the firm outperforming its underlying markets and believe it is set up for good growth after 2024. We see shares as close to fully valued, but tout Amphenol as a blue-chip stock to buy upon a pullback.

In 2022, battery electric vehicles represented nearly 10% of global auto sales, up from a little less than 6% in 2021. Much of the growth occurred in China, which has been a leader in EV sales over the past decade. However, with national EV subsidies in China expiring in 2022 and far lower sales in the U.S. and Europe, the market questions if EV sales can continue to grow without subsides.

We maintain our $83 fair value estimate for Amphenol shares after second-quarter results beat guidance but third-quarter results modestly missed our expectations. Communications and consumer-facing end markets continue to be soft, but we like to see ongoing strength out of automotive and military sales. We are also pleased with improving orders across end markets as a positive leading indicator for results. Amphenol’s best-in-class margins once again impressed in the quarter. The firm’s ability to consistently execute on profitability is a large tenet of our wide-moat thesis on the blue chip company. At present, we don’t love Amphenol’s valuation, but it is a fundamentally terrific name for investors to buy upon a pullback.

We maintain our $83 per share fair value estimate for Amphenol after a strong first quarter and guidance for second-quarter moderation. Inventory digestion at data center and mobile network customers is depressing demand for Amphenol’s communications products, but other end markets remain healthy. Despite a downturn in several of its markets, Amphenol’s profitability shows remarkable resilience. The firm’s ability to efficiently manage expenses with a localized cost structure, even during periods of weak demand, is a key tenet of our wide economic moat and exemplary capital allocation ratings. Amphenol stock is trading more than 10% below our fair value estimate in response to short-term market weakness. We see its modest selloff as short-sighted and recommend investors buy into the blue-chip company while it’s at a discount.

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.

We think Amphenol is a differentiated connector supplier, an excellent operator, and an exceptional steward of shareholder capital. Amphenol competes against myriad competitors in the fragmented electrical component industry, but its broad array of diverse end markets allows it to grow the top line even in the midst of an individual market downturn. We also think the firm’s unique ability to effect cost controls gives it the highest operating margins of its peer group, and allows it to quickly bring its numerous acquisitions up to firmwide profitability.

We maintain our $83 fair value estimate for wide-moat Amphenol and continue to view shares as undervalued. Amphenol recorded yet another impressive quarter despite a softening macroeconomic environment that is having greater effects at peers. We view Amphenol's excellent execution across varied business backdrops as evidence of both its end market diversity and its variable cost structure that underpins our Wide economic moat and Exemplary capital allocation ratings. We see signs of slowing orders, but we don't anticipate significant results deterioration for the firm. Amphenol is a stellar operator, and one we think would weather a worsening economic downturn better than its peers. In our view, investors have an attractive opportunity to get shares of this blue-chip company at a discount.

We maintain our $83 fair value estimate for Amphenol after the company reported stellar second-quarter results and guided for more strength in the third quarter. We are encouraged by Amphenol’s ability to report impressive results even as macroeconomic headwinds show signs of hampering peers, but we're not surprised. Exceptional operational consistency has become commonplace for the company, and we’ve grown accustomed to unflappable results across business cycles. We credit the firm’s decentralized model, variable cost structure, and diverse portfolio of differentiated technology for such consistently strong performance. These also inform our wide economic moat rating. We regard Amphenol as a stellar operator, and even with the shares up 6% after reporting, we see room to run and think investors still have an opportunity to get a blue-chip company at a discount.

We’re upgrading Amphenol’s economic moat rating to wide, from narrow, and subsequently raising our fair value estimate modestly to $83 per share, from $81. We continue to see shares as undervalued at current levels. We think a broad market sell-off has given savvy investors a rare opportunity to get shares of this high-quality name at a discount.

We think Amphenol is a differentiated connector supplier, an excellent operator, and an exceptional steward of shareholder capital. Amphenol competes against myriad competitors in the fragmented electrical component industry, but its broad array of diverse end markets allows it to grow the top line even in the midst of an individual market downturn. We also think the firm’s unique ability to effect cost controls gives it the highest operating margins of its peer group, and allows it to quickly bring its numerous acquisitions up to firmwide profitability.

We’re maintaining our $81 fair value estimate for Amphenol after the company reported stellar first-quarter results and more modest guidance. We continue to be impressed by Amphenol’s execution amid every macro environment or headwind that it encounters and view the firm as a bastion of consistent financial performance. We think this quarter once again showed the benefits of Amphenol’s diverse end market strategy and decentralized organization structure, with broad-based growth and strong profitability despite myriad headwinds. This execution and diversification is what underpins our narrow economic moat rating, our estimation of a lower cost of capital than peers, and our growth forecast for the firm. Following their recent pullback, we now view the shares as attractive for investors.

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.

We think Amphenol is a differentiated connector supplier, an excellent operator, and an exceptional steward of shareholder capital. Amphenol competes against myriad competitors in the fragmented electrical component industry, but its broad array of diverse end markets allows it to grow the top line even in the midst of an individual market downturn. We also think the firm’s unique ability to effect cost controls gives it the highest operating margins of its peer group, and allows it to quickly bring its numerous acquisitions up to firmwide profitability.

Amphenol is a leading designer and manufacturer of interconnect systems and sensors for a plethora of applications, benefitting from trends toward efficiency, connectivity, higher speed data, and electrical complexity. Amphenol competes against myriad competitors in the fragmented electrical component industry, but its broad array of end markets allows it to grow the top line even in the midst of an individual market downturn. The firm’s unique ability to effect cost controls gives it the highest operating margins of its peer group, and allows it to quickly bring its numerous acquisitions up to firmwide profitability.

We are raising our fair value estimate for narrow-moat Amphenol to $62 per share, up from $60, after the firm handily beat its third-quarter guidance on the top and bottom lines. Amphenol benefitted from robust demand from cloud and industrial customers during the quarter, and notched strong year-over-year growth out of the automotive end market. Against a backdrop of supply-constrained automotive OEMs lowering production which led to sequential drops in automotive revenue for most—if not all—of Amphenol’s peers, we are impressed Amphenol was able to keep automotive sales flat sequentially. In our view, such remarkable outperformance stems not only from Amphenol’s greater content in electric vehicles, but also its unique decentralized organizational structure that gives general managers immense autonomy in their operations. We credit Amphenol’s structure for its steadfast historical performance through numerous market cycles (the firm has gone more than a decade without an annual sales decline), and for it holding the best margins in its peer group. While we expect some modest sequential declines going into the fourth quarter, we think Amphenol will be able to weather current supply and cost pressures better than its peers. Nevertheless, we continue to see shares as rich at current levels.

Amphenol is a leading designer and manufacturer of interconnect systems and sensors for a plethora of applications, benefitting from trends toward efficiency, connectivity, higher speed data, and electrical complexity. Amphenol competes against myriad competitors in the fragmented electrical component industry, but its broad array of end markets allows it to grow the top line even in the midst of an individual market downturn. The firm’s unique ability to effect cost controls gives it the highest operating margins of its peer group, and allows it to quickly bring its numerous acquisitions up to firmwide profitability.