Company Reports

We maintain our $295 fair value estimate for shares of narrow-moat Littelfuse after its first-quarter results fell in line with our longer-term recovery thesis. Littelfuse is still seeing weaker demand in most of its end markets, resulting from customers working down inventories built up over the past two years. The firm’s outlook for sales fit our model, and while its short-term profit forecast was below our expectations, we continue to see progression back from current low levels over the next two years. We maintain our confidence in Littelfuse’s long-term opportunity in electrification and see the current period of weakness as a short-term, cyclical dynamic. We see shares as nicely undervalued for long-term investors.

We have lowered our fair value estimate for narrow-moat Littelfuse to $295 per share from $310 to incorporate weaker results in the short term. Fourth-quarter results met our expectations, but guidance for the first quarter and commentary on the full year missed our model. Littelfuse continues to manage mixed demand across its end markets, with inventory destocking hampering new electronics orders, pockets of weakness affecting industrial demand, and automotive orders staying stable. We expect headwinds to continue in 2024 but make way in the back half of the year for growth. Still, we now expect a modest decline in sales in 2024, compared with our previous expectation for modest growth. We continue to believe Littelfuse is well positioned to capitalize on electrification and higher voltages across vehicles, industrial equipment, and consumer devices in the long run. We anticipate demand and results will rebound toward the end of 2024 and continue into 2025. We see the shares as nicely undervalued.

We think Littelfuse is a differentiated supplier of electrical protection into cars and industrial applications. While it is a smaller player than other competitors we cover in the components market, it has aligned its portfolio toward secular themes of safety, efficiency, and connectivity to pursue growth. We think Littelfuse’s best organic growth opportunities will come from vehicle electrification and charging infrastructure; battery electric vehicles require 5 times the circuit protection content of an internal combustion counterpart, and charging infrastructure presents a lucrative opportunity for the firm’s growing power semiconductor business.

We maintain our $310 fair value estimate for shares of narrow-moat Littelfuse after its third-quarter results met our expectations. The firm’s fourth-quarter guidance missed our model, but we continue to expect results to begin a recovery in 2024 and grow meaningfully in 2025. Littelfuse continues to see customers moderating orders as they work through existing inventories, and weaker end demand in markets like industrial equipment, heavy vehicles, and consumer applications. Long term, we continue to see the firm as a beneficiary of secular trends toward electrification and higher voltage, and we expect it to outperform its end markets during a rebound due to content growth. We see shares as undervalued.

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 think Littelfuse is a differentiated supplier of electrical protection into cars and industrial applications. While the firm is a smaller player than other competitors in the components market under our coverage, it has aligned its portfolio toward secular themes of safety, efficiency, and connectivity to pursue growth. We think Littelfuse’s best organic growth opportunities will come from vehicle electrification; battery electric vehicles require five times the circuit protection content of an internal combustion counterpart, and charging infrastructure presents a lucrative opportunity for the firm’s growing power semiconductor business.

We trim our fair value estimate for narrow-moat Littelfuse to $310 per share, from $318, after it missed second-quarter profitability guidance and as the third-quarter outlook came in below our expectations. Littelfuse continues to see soft demand with customers working down elevated inventories built up during surging post-pandemic demand. These effects are particularly noticeable in Littelfuse's consumer and communications businesses, but are emerging in the heavy vehicle market as well. First-quarter results showed lessened effects that gave us optimism, but second-quarter results and third-quarter guidance below our model show that market dynamics continue to be bumpy. Longer term, we continue to have confidence in Littelfuse's strong position to benefit from electrification across its served markets, and in its stickiness with customers. Shares sold off an excessive 11% after the call, and we see upside at current levels.

We maintain our $318 fair value estimate for narrow-moat Littelfuse shares after its first-quarter results and second-quarter guidance exceeded our expectations. Littelfuse’s first half of 2023 looks better than we previously feared, despite pockets of weakness enduring in its consumer-facing, communications, and automotive markets. We now expect more modest softness in 2023, but uncertainty remains in the second half of the year with how customer inventory destocking and demand progress. Even in a mild environment, we remain impressed with Littelfuse’s execution on profitability. Past 2023, we continue to view Littelfuse as a long-term beneficiary of trends toward electrification across its end markets. Shares rose 7% after the print, but we continue to see material upside for investors that buy in at current levels.

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.

We think Littelfuse is a differentiated supplier of electrical protection into cars and industrial applications. While the firm is a smaller player than other competitors in the components market under our coverage, it has aligned its portfolio toward secular themes of safety, efficiency, and connectivity to pursue growth. We think Littelfuse’s best organic growth opportunities will come from vehicle electrification; battery electric vehicles require five times the circuit protection content of an internal combustion counterpart, and charging infrastructure presents a lucrative opportunity for the firm’s growing power semiconductor business.

We maintain our $318 fair value estimate for narrow-moat Littelfuse after reporting good third-quarter results. Littelfuse is broadly still enjoying strong demand across its end markets, and supply constraints are slowly alleviating. We anticipate that demand will wane further into 2023, but we believe Littelfuse is well positioned to navigate a softer environment with sticky, vital products. Long term, we remain confident in trends toward high-voltage electric vehicles and renewable energy infrastructure to drive demand and end market outperformance for Littelfuse. We think the current share price ignores this long-term opportunity and overweights the firm’s semiconductor exposure. We see meaningful upside for investors.

We think Littelfuse is a differentiated supplier of electrical protection into cars and industrial applications. While the firm is a smaller player than other competitors in the components market under our coverage, it has aligned its portfolio toward secular themes of safety, efficiency, and connectivity to pursue growth. We think Littelfuse’s best organic growth opportunities will come from vehicle electrification; battery electric vehicles require five times the circuit protection content of an internal combustion counterpart, and charging infrastructure presents a lucrative opportunity for the firm’s growing power semiconductor business.

We maintain our $318 fair value estimate for narrow-moat Littelfuse after its second-quarter results exceeded guidance and management gave a mixed view into the remainder of the year. Littelfuse is dealing with headwinds across its end markets, including coronavirus-related lockdowns, foreign-exchange rates, and softer electronics and automotive demand. We think such dynamics are short-term. Our long-term expectations for Littelfuse to outperform its end markets and benefit from secular trends toward electrification and efficiency are unchanged. Investors willing to endure some modest cyclicality have an attractive entry point.

We think Littelfuse is a differentiated supplier of electrical protection into cars and industrial applications. While the firm is a smaller player than other competitors in the components market under our coverage, it has aligned its portfolio toward secular themes of safety, efficiency, and connectivity to pursue growth. We think Littelfuse’s best organic growth opportunities will come from vehicle electrification; battery electric vehicles require five times the circuit protection content of an internal combustion counterpart, and charging infrastructure presents a lucrative opportunity for the firm’s growing power semiconductor business.

We think Littelfuse is a differentiated supplier of electrical protection into cars and industrial applications. While the firm is a smaller player than other competitors in the components market under our coverage, it has aligned its portfolio toward secular themes of safety, efficiency, and connectivity to pursue growth. We think Littelfuse’s best organic growth opportunities will come from vehicle electrification; battery electric vehicles require five times the circuit protection content of an internal combustion counterpart, and charging infrastructure presents a lucrative opportunity for the firm’s growing power semiconductor business.

Narrow-moat Littelfuse’s first-quarter results dazzled on both the top and bottom lines, and we’re maintaining our $318 fair value estimate. We’re impressed with Littelfuse’s ability to offset cost inflation with price increases, but we expect pricing impact to lessen through the year. The top line was helped by inorganic contributions, but we continue to see robust organic demand. We think the marriage of organic and inorganic growth aligns with management’s long-term strategy (and exemplified by the acquisitions of C&K Switches and Embed in the quarter), and we have confidence in Littelfuse’s ability to execute on both over the long term. Shares were up as much as 10% following the call on near-term profitability but still look fundamentally undervalued to us.

We think Littelfuse is a differentiated supplier of electrical protection into cars and industrial applications. While the firm is a smaller player than other competitors in the components market under our coverage, it has aligned its portfolio toward secular themes of safety, efficiency, and connectivity to pursue growth. We think Littelfuse’s best organic growth opportunities will come from vehicle electrification; battery electric vehicles require five times the circuit protection content of an internal combustion counterpart, and charging infrastructure presents a lucrative opportunity for the firm’s growing power semiconductor business.

We’re raising our fair value estimate for Littelfuse to $318 per share, from $300, after raising our sales forecast to incorporate the impact of the firm’s 2021 acquisitions on growth. In particular, we expect the Carling Technologies acquisition (closed November 2021) to add a significant inorganic contribution to the firm’s transportation segment in 2022, and expect the larger combined segment to exhibit a similar organic growth profile to what we had previously forecast. We anticipate margin headwinds to impact Littelfuse throughout 2022—inclusive of rising input costs across end markets and integration costs with the Carling acquisition—but expect these to be transitory and wane by 2023. Long-term, we think growth signals for Littelfuse are flashing green. We think the secular trend toward higher voltage applications is a demand tailwind for Littelfuse, and think cross-selling within a broadening portfolio of acquisitions creates additional opportunities. We view shares as undervalued. Shares were modestly down following the release, which we view as a nearsighted reaction to margin headwinds during 2022. We think long-term investors should view the current valuation as an attractive entry point.

We are raising our fair value estimate for narrow-moat Littelfuse to $300 per share, from $280, after the company crushed its guidance for the third quarter in a row. Even in the face of a soft automotive market, Littelfuse’s electronics segment carried the firm to sequential growth and a third straight record for quarterly revenue. We think Littelfuse is taking advantage of ongoing supply shortages and stealing market share with its in-house production. Even as we expect the company to see a seasonal sequential sales decline in the fourth quarter and face continued challenges in the automotive market, we think Littelfuse will continue to outperform its end markets and benefit from electrification by growing its dollar content in end products. With shares relatively flat after the release (we think the market is overly wary of short-term automotive supply constraints), we now view Littelfuse as modestly undervalued.

Littelfuse is a leading provider of passive electronic components, providing a bevy of circuit protection and power management products into the end markets of transportation, industrial, telecommunications, and consumer electronics. While the firm is a smaller player than other competitors in the components market under our coverage, it has aligned its portfolio toward secular themes of safety, efficiency, and connectivity to pursue growth. We think Littelfuse’s best organic growth opportunities will come from vehicle electrification; battery electric vehicles require five times the circuit protection content of an internal combustion counterpart, and charging infrastructure presents a lucrative opportunity for the firm’s growing power semiconductor business.