On Monday, Evercore ISI maintained a positive outlook on Amphenol Corporation (NYSE:APH) shares, reiterating an Outperform rating with a steady price target of $75.00. The firm anticipates that Amphenol will surpass the street's expectations for the September quarter, driven by a conservative initial setup and the inclusion of results from the CIT deal. The sequential revenue increase is expected to be around 5%, which is slightly lower than the historical third-quarter average of 7%.
According to Evercore ISI, the IT/Datacom sector is likely to outperform due to AI-related growth, while the Mobile Devices segment, which includes mobile phones and PCs, could provide additional positive results. Despite a weaker overall automotive sector, the Industrials segment, particularly outside of Europe, may show incremental improvements due to lean channel inventory.
The consensus revenue estimate for the fourth quarter aligns with historical seasonality, but Amphenol is projected to guide moderately higher, factoring in contributions from CIT, improvements in Industrials, sustained strength in Military/Aero, and growth in Mobile Devices.
Key industry observations include ongoing strength in IT/Datacom, propelled by AI infrastructure investments, mixed results in the Automotive sector with Europe facing challenges and China showing strength due to electric vehicle incentives. The latest survey on Apple (NASDAQ:AAPL) suggests robust demand for new models, which could lead to an upside for Amphenol. While the Industrial sector may have reached a turning point, Military/Aero is expected to remain strong.
Evercore ISI concludes that Amphenol is well-positioned to exceed September-quarter expectations, with IT/Datacom and Mobile Devices as the primary drivers of the upside. Although Broadband and Autos might show weaker performance, the December-quarter guidance is expected to meet or exceed consensus estimates.
Looking ahead to 2025, the firm foresees a potential for over 10% EPS growth for Amphenol, bolstered by the acquisition of Andrew Assets from COMM and widespread improvements across their end segments. With the anticipated AI ramps, EPS could reach upwards of $2.50 in 2025 and potentially $3.25-3.50 in the medium term.
In other recent news, Amphenol Corporation has been in the spotlight following a series of analyst adjustments and significant business developments. BofA Securities has revised its price target for Amphenol to $70.00 from $71.00, maintaining a Neutral rating. The firm anticipates Amphenol's Q3 revenue to hit $3.8 billion, aligning with the company's guidance and consensus estimates. Earnings per share are expected to be $0.45, in line with the higher end of Amphenol's guidance.
Baird, on the other hand, has maintained an Outperform rating on Amphenol, despite lowering the price target to $71 from $72. Evercore ISI also reaffirmed its Outperform rating and a $75.00 price target for the company. TD Cowen, however, reduced its price target for Amphenol to $60.00 from $115.00 but maintained a Hold rating.
Amphenol recently reported record Q2 sales of $3.610 billion, marking an 18% increase year-over-year, and completed the acquisition of Lutze U.S. The company also agreed to acquire CommScope's Outdoor Wireless Networks segment for $2.1 billion, despite a 17% decline in the broadband market. Amphenol projects Q3 sales between $3.7 billion and $3.8 billion. These are the latest developments in the company's ongoing operations.
InvestingPro Insights
Amphenol Corporation's strong market position and financial performance align well with Evercore ISI's positive outlook. InvestingPro data shows that Amphenol has a substantial market capitalization of $78.95 billion, reflecting its prominence in the Electronic Equipment, Instruments & Components industry. The company's revenue growth of 18.2% in the most recent quarter supports the analyst's expectation of outperformance in the September quarter.
InvestingPro Tips highlight Amphenol's consistent dividend growth, having raised its dividend for 12 consecutive years. This demonstrates the company's financial stability and commitment to shareholder returns, which could be attractive to investors looking for both growth and income. Moreover, Amphenol's strong return over the last year, with a 61.45% price total return, underscores its market outperformance and aligns with the positive sentiment expressed in the article.
While the company trades at a high P/E ratio of 37.45, which might suggest an elevated valuation, this could be justified by its strong market position and growth prospects in AI-related segments, as mentioned in the article. Investors considering Amphenol may find additional value in exploring the 13 other InvestingPro Tips available, which could provide further insights into the company's financial health and market potential.
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