The stock of TE Connectivity (TEL) is up 5% after the little-known artificial intelligence (AI) company posted strong quarterly financial results and received a new Buy rating on Wall Street.
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The Irish company makes electronic components that are used in electric vehicles and AI models, as well as in medical devices and energy infrastructure. TE Connectivity reported Fiscal first-quarter earnings per share (EPS) of $1.95, which topped the consensus forecast among analysts of $1.89.
Revenue during the quarter came in at $3.84 billion, which was slightly below the $3.90 billion expected on Wall Street. Still, the company announced new orders of $4 billion, which is above its current sales, news that caught the eye of investors and analysts, sending TEL stock higher.
Buy Rating
Luke Junk, an analyst at brokerage Robert W. Baird, highlighted TE Connectivity’s new orders as he placed a Buy rating and a $162 price target on the stock. Junk also noted the current valuation of TEL stock, which is trading at 15 times future earnings estimates, much lower than most AI-related securities. Nvidia’s (NVDA) stock is trading at 58 times future earnings.
“With potential for improved momentum, AI tailwinds, and continued margin execution, we continue to like the stock,” wrote Junk. TE Connectivity makes the connectors that Nvidia’s microchips plug into. Management at TE Connectivity has forecast that their AI-related business should grow 100% year-over-year in Fiscal 2025 to $600 million.
TEL stock has risen 17% in the last 12 months.
Is TEL Stock a Buy?
TE Connectivity has a consensus Moderate Buy rating among 11 Wall Street analysts. That rating is based on four Buy, six Hold, and one Sell recommendations issued in the last three months. The average TEL price target of $163 implies 4.82% upside from current levels.
