TE Connectivity Earnings: Stronger Medium-Term Profit Assumptions Drive Our Valuation to $145

We raise our fair value estimate for narrow-moat TE Connectivity to $145 per share, from $135, after raising our medium-term profitability forecast for the firm. TE’s end markets have remained consistent throughout fiscal 2024, with pockets of weakness in industrial and commercial transportation applications offsetting healthy demand in cars and data centers. Despite fiscal fourth-quarter sales guidance missing our model, profits are outperforming our expectations and we have greater confidence in stronger margin performance to endure over the next five years. We also expect demand to begin recovering in industrial and commercial transportation in fiscal 2025. We see shares as fairly valued.