In a report released yesterday, Wamsi Mohan from Bank of America Securities reiterated a Buy rating on TE Connectivity (TEL – Research Report), with a price target of $170.00.
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Wamsi Mohan’s rating is based on TE Connectivity’s strategic acquisition of Richards Manufacturing, which is anticipated to significantly enhance TEL’s Industrial Solutions segment, especially in the utility grid and underground energy transmission markets. This acquisition, valued at $2.3 billion, is expected to close by June 2025 and will be financed with a mix of cash and debt, resulting in a moderate increase in TEL’s leverage ratio to 1.4x.
TEL projects a mid-teens return on invested capital following synergies, with Richards Manufacturing contributing approximately $400 million in annual sales and achieving EBITDA margins in the mid-30% range. The acquisition is expected to be accretive to TEL’s adjusted EPS by $0.10 in the first full year. The underlying market for TEL’s expanded energy business is set to grow at a high-single to low-double digit rate over the next five years, driven by increased demand from electric vehicle expansion and data center energy requirements. These factors underpin the confidence in TE Connectivity’s continued growth and profitability, supporting the Buy rating.
In another report released on January 31, TD Cowen also maintained a Buy rating on the stock with a $165.00 price target.
TEL’s price has also changed slightly for the past six months – from $144.700 to $146.490, which is a 1.24% increase.