Analyst Note| William Kerwin |
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.