Based on the recent data and news, here's a comprehensive analysis of TEL stock:
Recent Major Event Impact
TE Connectivity announced a significant $2.3 billion acquisition of Richards Manufacturing Co. The deal aims to:
- Enhance presence in North America's electrical utility market
- Add approximately $400 million in annual sales
- Generate mid-30% EBITDA margins
- Expected to close in Q3 fiscal 2025 (June 2025)
- Projected to add $0.10 to adjusted EPS in first full year
Technical Analysis
- Current price: $152.77 (as of Feb 14, 2025 close)
- RSI (14) at 59.17 indicates neutral momentum
- MACD shows positive momentum with MACD line above signal line
- Price is trading above both 20-day SMA ($149.27) and 200-day SMA ($148.50)
- Fibonacci levels suggest:
- Resistance: $154.29 (R1), $157.54 (R2)
- Support: $143.74 (S1), $140.49 (S2)
Fundamental Strength
- Strong credit rating maintained at 'A-' by S&P Global despite the acquisition
- Projected leverage ratio of 1.6x post-acquisition
- Expected revenue growth of 2-3% in FY2025 and 5-7% in FY2026
- EBITDA margins maintained at approximately 25%
Analyst Perspective
TD Cowen maintains a Buy rating with a $165 price target, citing:
- Strong datacenter sector growth offsetting weaker automotive trends
- Minimal downside risk across business segments
- Uncertain timing for transportation and industrial equipment growth
Recommendation
Given the technical strength, solid fundamentals, and strategic acquisition, TEL stock appears to be a HOLD at current levels. While the acquisition presents growth opportunities, the stock is trading near resistance levels and may consolidate in the short term. Consider:
- Entry points near support at $143.74
- Stop loss below $140.49
- Target price of $165 aligned with analyst projections