Shares of TE Connectivity (TEL), formerly Tyco Electronics, are up 43 cents, or 1%, at $36.62 this morning after Goldman Sachs?s Craig Hettenbach added the stock to the firm?s ?Conviction List,? writing that expectations for its earnings ?have been reset such that TEL can beat estimates as the recovery strengthens.?
Hettenbach raised his price target on the shares from $39 to $45, noting that the stock could have ?catalysts? this year, in particular a rejuvenation of the company?s automotive electronics business:
We think TEL can grow its automotive business nearly 10% annually over the next few years?led by roughly mid-single-digit auto production growth and a re-acceleration in dollar content?which is 200-300 bp above Street expectations.
Moreover, the other markets for its wares seem like they may do a bit better than the Street is modeling:
A cyclical rebound in the comm (25% of sales) and industrial (10%) markets should drive better growth for TEL in the June quarter and through the rest of the year. And following disappointing margins in CY11, we expect an 85 bp rebound this year and 120 bp next year, well ahead of the expansion at peers.
Hettenbach raised his 2012 estimates to $14.53 billion in revenue and $3.26 per share in profit, up from a prior $14.45 billion and $3.22. The Street is at $14.09 billion and $3.01, he notes.
Fin
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