Expectations for a Mild 2023 Don’t Alter Our Long-Term Conviction in Littelfuse; Shares Discounted

We maintain our $318 fair value estimate for Littelfuse shares after the firm reported fourth-quarter results largely in line with our expectations. Littelfuse capped off a terrific 2022 across its end markets, but we expect strength to moderate in 2023, particularly in the electronics segment. All three of the company’s segments are seeing headwinds from inventory digestion at customers that slow new purchases, but we see this primarily as healthy normalization and only anticipate the electronics market to see a durable impact in 2023. Despite softer expectations for 2023, we remain confident in Littelfuse’s ability to ride tailwinds toward broad electrification in the long term, and we see shares as undervalued.