TE Connectivity: Communications Digestion and Healthy Auto Demand Offset for In Line Q1; $125 FVE

We maintain our $125 fair value estimate for narrow-moat TE Connectivity after fiscal first-quarter results were in line with our expectations. Demand in the transportation and industrial verticals looks healthy, but a correction among communications customers is weighing on results. TE is also continuing to deal with headwinds from inflation and a strong U.S. dollar, but we expect these to wane through fiscal 2023. We expect TE’s end market backdrop to be modestly soft in fiscal 2023, but we remain confident in long-term drivers like the electric vehicle transition, where we see the firm’s position as strong. We see shares as fairly valued.