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Citi hikes Amphenol shares target on revenue, EPS growth levers

Published 2024/05/28, 17:00
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On Tuesday, Citi maintained its Buy rating on Amphenol Corporation (NYSE:APH) and increased the price target to $160 from $135. The adjustment reflects a positive outlook for the company's financial performance in the coming years.

Citi's analysis suggests that Amphenol has several factors that could contribute to revenue and earnings per share (EPS) growth within the next 12 to 24 months. These factors include an improving market for connectors, an increase in copper and fiber interconnect content in artificial intelligence servers, and potential further EPS accretion from the recent acquisition of CIT.

The firm notes that while rising copper costs might pose a challenge, Amphenol has historically managed to mitigate such impacts by passing these costs onto its customers. Additionally, the price of other materials, such as resin, has been on a downward trend, which may help balance any cost increases. Citi's forecasts for Amphenol's FY25 and FY26 EPS are both higher than the consensus estimates, by 2% and 4%, respectively.

Amphenol's ability to navigate through rising costs and its strategic acquisitions position it favorably in the eyes of Citi. The updated price target is based on a 35x multiple of the projected FY26 EPS, compared to the previous 33x multiple of the FY25 EPS. This revision underscores Citi's confidence in Amphenol's growth trajectory and its proactive measures to ensure profitability despite market challenges.

The company's stock performance and investor sentiment will likely be influenced by its ability to leverage the identified growth levers and continue its successful cost management strategies. With the maintained Buy rating, Citi signals its belief in Amphenol's potential for strong financial results and market performance soon.

InvestingPro Insights

As Citi maintains a positive stance on Amphenol Corporation (NYSE:APH), the latest data from InvestingPro aligns with their bullish outlook. With a market capitalization of $81.75 billion and a robust P/E ratio of 39.89, Amphenol showcases its significant presence in the Electronic Equipment, Instruments & Components industry. The company's consistent financial performance is further highlighted by its revenue growth of 9.49% for Q1 2023, indicating a strong start to the year.

InvestingPro Tips reveal that Amphenol has raised its dividend for 12 consecutive years, demonstrating a commitment to returning value to shareholders. Additionally, the company has maintained dividend payments for 20 consecutive years, which is a testament to its financial stability and prudent management. These aspects, coupled with a dividend yield of 0.65%, could be particularly attractive to income-focused investors.

Amphenol's stock has experienced a significant uptick, with a 1-year price total return of 79.49%, trading near its 52-week high at 98.32% of the peak value. This performance underlines the company's robust market position and the optimism surrounding its future prospects.

For investors seeking more in-depth analysis, InvestingPro offers additional tips, providing a comprehensive view of Amphenol's financial health and market potential. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore the 21 additional InvestingPro Tips available for Amphenol at https://www.investing.com/pro/APH.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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