Amphenol’s Price Target Boosted by RBC to $85 From $81, Rating Kept at Top Pick

Amphenol (APH) received a price-target boost Tuesday from RBC Capital Markets following meetings the firm held with the CEO and CFO of the provider of electrical, electronic and fiber optic connectors.

The new price target is $85 per share, up from $81. This moves the target further above the stock’s Monday closing price of $79.75 as well as its 52-week high of $80.14.

Following the meeting with Amphenol’s management, RBC said it sees “plenty of tailwinds ahead” for the company. The firm noted Amphenol remains confident in its ability to sustainably outgrow the industry via organic and inorganic initiatives.

The firm said Amphenol remains positioned to execute deals going forward across the size spectrum, comfortable taking leverage up to 2.5 times. In information technology/data communications, the firm sees “strong organic growth driven by share gains and extensive presence with hyperscale customers.” It noted the company is starting to see incremental traction with Chinese service providers.

Sensors also remain a core focus as Amphenol “sees traction with customers in selling sub-systems that combine connectors, cable and sensors in one cohesive product,” RBC said. In the automotive market, there are “multiple levers to enable growth well ahead of underlying production trends (ramping sensor+connector solutions),” the firm said, adding that in the military/aerospace sector, the company expects “sustained organic growth here and noted potential benefits from vendor list consolidation by the military and focusing spend on strategic technology and electronics.

The mobile-devices segment is expected to decline in 2017 due to tablet headwinds and smartphone share dynamics, the firm noted. Still, on a net basis, RBC maintained its investment rating on the stock at top pick while increasing the price target to $85 to reflect a multiple of 26 times its estimate for 2018 earnings per share.

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