Analyst Note| William Kerwin |
We’re maintaining our $125 fair value estimate for narrow-moat TE Connectivity after the company reported strong fiscal second-quarter results. We think TE is executing well against headwinds like supply constraints and inflation. Even as these are expected to weigh on fiscal third-quarter results, we see our long-term thesis playing out. We continue to look for end-market outperformance—particularly in automotive—and order growth as fundamental indicators for TE’s performance and have been pleased with both through the first half of fiscal 2022. After spending much of the last 12 months at a premium to our fair value estimate, the shares now appear fairly valued following a pullback in 2022.