TE Connectivity’s Stock: A Mixed Performance Amid Industry Challenges
TE Connectivity plc (TEL), established in 1941 and based in Ballybrit, Ireland, specializes in advanced connectivity and sensor solutions across various sectors. The company operates through its Transportation, Industrial, and Communications segments, serving industries like automotive, aerospace, data centers, and the Internet of Things (IoT).
Market Position and Stock Performance
TE Connectivity utilizes modern technologies, from 5G applications to medical devices, integrating tools like 3D printing and AI designs to adapt to changing market needs. Currently, its market capitalization is $45.2 billion.
The stock performance of TE Connectivity shows a journey of modest gains despite some missed opportunities. Over the past 52 weeks, TEL stock rose by 15.7%, with a year-to-date increase of 7.6%. However, this growth falls short compared to the S&P 500 Index’s ($SPX) impressive 31.8% returns in the last year and 25.8% gains in 2024. Similarly, TEL has also underperformed compared to the Technology Select Sector SPDR Fund’s (XLK) 25.6% returns over the previous year and 20.3% YTD gains.
Current Company Challenges and Earnings Outlook
While TE Connectivity’s shares remain mostly positive, the larger market performance has overshadowed them. The company’s achievements in electric vehicles and industrial automation, combined with its global presence, provide some stability.
However, Q4 earnings results released on October 30 highlighted several challenges. For instance, there has been stagnation in global auto production and the expectation of declines in Western markets in 2025. Furthermore, the industrial sector is facing difficulties, particularly due to diminished demand for factory and building automation in Europe. Commercial transportation is also struggling, with a recovery anticipated only by late 2025.
Adjustments in currency and tax conditions impacted earnings, reducing adjusted EPS by $0.39. Additionally, TE’s sensors business is facing market weaknesses and ongoing changes in its product lineup. Despite these hurdles, the company remains committed to high-growth sectors and innovation, showing a certain resilience amid ongoing macroeconomic and industry-related challenges.
Future Projections and Analyst Insights
For the fiscal year ending September 2025, analysts predict that TE Connectivity’s profits will increase by 7.7% year over year to $8.14 per share. The company has a solid history of earning surprises, having met or exceeded consensus expectations for the last four quarters.
The overall consensus is a “Moderate Buy” among the 15 analysts covering TEL stock, showing eight ratings as “Strong Buy” and seven as “Hold.” Recently, the sentiment has slightly improved from three months prior when there were fewer “Strong Buy” ratings.
In September, HSBC adjusted its outlook on TEL stock to a more cautious stance, downgrading it from “Hold” to “Reduce” and lowering the price target to $137 from $156. This change reflects ongoing revenue challenges within TEL’s transportation and industrial segments, which experienced declines in Q4. Notably, automotive, sensors, and commercial transportation all reported annual drops, indicating persistent demand weaknesses.
On the bright side, industrial revenue issues continue, compounded by extended destocking effects. Nevertheless, HSBC observed that TEL’s communications subsegment saw growth, driven by escalating demand for AI, with orders up 36.8% year over year. While this area offers optimism, the revised forecasts suggest broader hurdles for TEL in the near term.
Expected Price Movements and Market Sentiment
The mean price target of $167.80 for TEL stock indicates an upside potential of 11%. Furthermore, a high-end target price of $190 hints at a potential rally of as much as 25.7% from current levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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