Amphenol: CommScope Deal Continues M&A Strategy and Adds Breadth, but We Maintain Valuation

We maintain our $50 fair value estimate for wide-moat Amphenol after the company announced the acquisition of antenna businesses from CommScope. In our view, Amphenol is paying a fair price for the assets, which fit with its overall acquisition strategy. We believe these acquired adjacent products are a positive addition to the communications component portfolio for Amphenol, which remains a serial consolidator in the fragmented component market. We also believe this is a savvy purchase of solid assets from a distressed company, as CommScope's valuation and fundamentals are severely cyclically depressed. We like Amphenol as a blue-chip component firm that offers investors strong diversified growth and best-in-class profitability, but we find its valuation challenging at these levels.