TE Connectivity Riding Macro Recovery Despite Supply Constraints; Shares Still Rich

Narrow-moat TE Connectivity reported fiscal third-quarter results above guidance and our expectations, and we’re bumping our fair value estimate up to $120 per share from $115 previously. TE set a quarterly sales record as it continues to benefit from a broader market recovery and cited particular outperformance in electric vehicles, cloud capital expenditures, and factory automation. We’re pleased to see continued content growth in these areas, and TE’s ability to sell into new sockets for cutting-edge applications like onboard charging and data centers is a key tenet of our narrow moat rating for the firm. We think TE is poised to close out fiscal 2021 with more double-digit year-over-year growth but shares remain rich, and investors should wait for a pullback.