TE Connectivity Faces Challenges Despite Strong Market Position
Company Overview and Financial Performance
TE Connectivity Ltd. (TEL), based in Switzerland, designs and manufactures connectivity and sensor solutions. With a market capitalization of $45.3 billion, the company operates in three main segments: Transportation Solutions, Industrial Solutions, and Communications Solutions.
Recognized as a large-cap stock, TE Connectivity’s market cap signifies its significant size and influence in the electronic components sector. The company’s expertise spans various fields, including automotive, industrial, and communications, showcasing its diverse service capabilities.
Recent Stock Performance
Recently, TE Connectivity shares have dropped 6.1% from their 52-week high of $159.98 reached on July 24. Over the past three months, the stock has increased by 4.3%, a notably lower performance compared to the S&P 500 Index’s ($SPX) 9.8% gains during the same period.
Looking at a longer timescale, TE Connectivity has not performed as well as the broader market. Over the past year, TEL shares rose 12.7% and saw a 6.9% increase in 2024, whereas the S&P 500 reported impressive gains of 31.1% in the last year and 26.5% year-to-date.
Further confirming a bearish trend, TEL has been trading below its 200-day moving average since late July and under its 50-day moving average since early last year.
Market Pressures and Future Outlook
TE Connectivity’s struggles seem to stem from stagnant global auto production and anticipated declines in the Western markets for 2025. Additionally, there is weak demand for factory and building automation in Europe, and the commercial transportation sector remains sluggish, with a recovery projected for late 2025. Challenges such as currency fluctuations, tax pressures, and issues in the sensors business, which is experiencing market weakness, have also impacted the company’s performance.
Latest Earnings Report
In its Q4 earnings report on October 30, TE Connectivity’s shares dropped 2.9% the following trading day. The company reported adjusted earnings of $1.95 per share, which aligned with Wall Street expectations. Total revenue for the quarter was $4.07 billion, slightly above the forecast of $4.01 billion. Moving forward, TE Connectivity anticipates an EPS of $1.88 for the upcoming quarter, with projections of approximately $3.9 billion in revenue.
In contrast, competitor Celestica Inc. (CLS) has outperformed TE Connectivity as well as the S&P 500. CLS has seen a remarkable increase of 223.7% over the past year and 200.6% in 2024.
Among the 15 analysts covering TEL stock, the consensus rating stands at “Moderate Buy,” with a mean price target of $167.80, suggesting an 11.7% potential upside from current trading levels.
On the date of publication,
Kritika Sarmah
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy
here.
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