By: Scott Davis
Our positive rating on our initiation of TE Connectivity was based on the thesis of strong secular content growth in Transportation, better than expected macro tailwinds for Industrial – both supported by predictably solid incremental margins and high cash generation. We see no change to our thesis, in fact we are more encouraged as both segments exceeded our expectations for the quarter. The stock leaked today (down 3.4% vs flat market), perhaps expectations for growth/margin were a tad higher than reported – or more likely we think folks are overly concerned about weakness in TEL’s least important business: SubCom. We’d buy this pullback.