Citi upgrades TE Connectivity stock to Buy on auto market stabilization

Investing.com - TE Connectivity (NYSE:TEL) stock rating was upgraded by Citi from Neutral to Buy with a price target raised to $200.00 from $150.00. The stock, currently trading near its 52-week high of $175.31, has demonstrated strong momentum with a 25.28% return over the past six months. According to InvestingPro analysis, the company maintains a GOOD overall financial health score.

Citi analyst Asiya Merchant cited stabilizing automotive trends as a key factor in the upgrade decision, noting that auto represents approximately 40% of TE Connectivity’s total revenues. Recent data points in the automotive market suggest conditions have stabilized. With a market capitalization of $51.9 billion and a P/E ratio of 38.02, TE Connectivity trades at premium valuations relative to its peers in the Electronic Equipment sector.

The upgrade follows S&P’s revision of its 2025-2027 global light vehicle production (LVP) forecasts, which were raised by +1.0%, +0.7%, and +0.6% respectively. S&P now projects 2025-2027 global LVP year-over-year growth at -0.3%, +0.4%, and +3.0%.

While electric vehicle adoption remains tempered, Citi continues to view the ongoing trend of electrification, including e-mobility and increased data connectivity, as positive factors for TE Connectivity’s business outlook.

Despite challenges in the automotive market, Citi noted that TE Connectivity has demonstrated margin resiliency in its automotive segment, with the March quarter showing improving order trends.

In other recent news, TE Connectivity reported better-than-expected fiscal second-quarter results, with adjusted earnings of $2.10 per share, surpassing analyst consensus of $1.96. Revenue rose 4% year-over-year to $4.1 billion, exceeding estimates of $3.96 billion. The company issued optimistic guidance for the fiscal third quarter, forecasting adjusted earnings of approximately $2.06 per share on revenue of about $4.3 billion, both above Wall Street expectations. HSBC upgraded TE Connectivity’s stock rating from Hold to Buy, raising the price target to $175, citing a positive outlook on the company’s valuation and growth prospects. BofA Securities also raised its price target on the stock to $190 from $168, maintaining a Buy rating, and expects third-quarter fiscal revenue to be $4.34 billion, above both Street estimates and the company’s guidance. In financial developments, TE Connectivity announced the pricing of a $900 million senior notes offering through its subsidiary, Tyco Electronics Group S.A., with plans to use the proceeds for general corporate purposes, including debt repayment. The company continues to deliver solid growth and profitability despite challenging macroeconomic conditions.

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