Littelfuse Earnings: We Continue to Like Long-Term Prospects After Short-Term Softer Demand

We maintain our $295 fair value estimate for shares of narrow-moat Littelfuse after its first-quarter results fell in line with our longer-term recovery thesis. Littelfuse is still seeing weaker demand in most of its end markets, resulting from customers working down inventories built up over the past two years. The firm’s outlook for sales fit our model, and while its short-term profit forecast was below our expectations, we continue to see progression back from current low levels over the next two years. We maintain our confidence in Littelfuse’s long-term opportunity in electrification and see the current period of weakness as a short-term, cyclical dynamic. We see shares as nicely undervalued for long-term investors.