Analyst Note| William Kerwin |
Narrow-moat TE Connectivity’s second-quarter results resoundingly surpassed our expectations on both the top and bottom lines, and the firm guided for an equally strong third quarter. We are raising our fair value estimate to $115 per share from $110 as we incorporate stronger short-term sales growth. TE is benefiting from especially strong end-market rebounds from 2020 lows, and our long-term thesis for expanding content in end products driving top-line growth remains intact. With the shares trading at about a 14% premium to our fair value estimate, we recommend awaiting a greater margin of safety to invest.