By: Scott Davis
TE Connectivity, originally Tyco Electronics pre-2007, should benefit from multiple years of both cyclical (industrial capex) and secular (electrification) tailwinds. And we have a more positive view on TEL’s ability to capture the value of both drivers than the consensus view. Consequently, we are initiating with an Overweight rating and a price target of $135, based on a 19x multiple on 2020E earnings of $7.10. Note that we do not factor in the full impact of buybacks or incremental M&A into our numbers, which would be additive to our EPS estimates.
TEL is a global provider of connectors and sensor technologies, serving multiple end markets such as automotive, A&D, industrial equipment, medical, energy/subcom, and consumer (data networks and appliances).
We observe that TEL analysts/shareholders are split ~75% tech focused and ~25% industrials, and analysts may be missing the extent of industrial tailwinds and the following drivers…