Amphenol top pick, cautious near-term stance on TE Connectivity and Sensata: Evercore

[Wall Street street sign in Manhattan financial district]
Alexey_Fedoren

Evercore maintained Amphenol (APH [https://seekingalpha.com/symbol/APH]) as its top pick and took a more cautious near-term stance on TE Connectivity (TEL [https://seekingalpha.com/symbol/TEL]) and Sensata Technologies (ST [https://seekingalpha.com/symbol/ST]), noting that near-term fundamentals are "more choppy though long term trends remain intact."

The firm highlighted key trends for the connector and sensor markets.

Analysts led by Amit Daryanani said that the connector market delivered a stronger-than-expected performance in 2025, growing about 14.7% year-over-year to about $99.2B, significantly above prior estimates of around 7.9%. This reinforces the sector’s positioning as an attractive area within technology, supported by multiple secular tailwinds, diversified end-market exposure, ongoing industry consolidation, and strong free cash flow, or FCF, generation, according to the analysts.

Looking into 2026, the analysts expect the industry to sustain the positive momentum seen in 2025 with key focus points on: Firstly, continued strength in the IT and telecom markets, where AI-driven infrastructure buildouts are increasing connectivity content per system as data center racks become more complex and critical.

Secondly, the analysts said that recovery in the industrial segment is to be supported by robust tailwinds from energy transition investments and increasing adoption of factory automation and robotics. Lastly, the automotive market contends with near-term headwinds and growth remaining uneven across regions due to slower EV adoption, the China slowdown, and broader macro and policy uncertainty, the analysts added.

AMPHENOL

Evercore has an Outperform rating and $180 price target on Amphenol's stock.

"APH: Remains best positioned to capitalize from the AI investment cycle given leading position in both copper and fiber. They should benefit from a robust M&A strategy and more agile cost structure vs. peers. APH remains the leading AI provider for next-gen platforms with the broadest portfolio stack and customer exposure," said Daryanani and his team.

The analysts noted that Amphenol’s unique combination of agility, diversity, and global scale remains a key differentiator that should enable the company to sustain long-term double-digit revenue growth and high-teens EPS growth with limited volatility.

TE CONNECTIVITY

Evercore had downgraded TE Connectivity's rating to In-Line from Outperform on June 21 with a $230 price target.

"While we continue to see compelling long-term secular tailwinds in AI, energy, and factory automation, near-term pressures (particularly from its higher exposure to automotive markets, including China, and slower EV penetration) are likely to weigh on performance," said the analysts.

SENSATA

The firm has an In Line rating and a $43 price target on Sensata's stock.

"While Sensata is executing better (margins are stabilizing, FCF/deleveraging have improved), we stay In Line because while the turnaround is real, risk/reward is balanced given auto/HVAC [Heating, Ventilation, and Air Conditioning] softness, regional CPV [content per vehicle] mix risk, and a valuation that now requires continued execution," said Daryanani and his team.

The analysts think that if demand shows up, there is potential for plus $5.00 EPS and stock working to the $75 to $80 range, but that’s likely more driven by demand versus self help at this point. "Conversely, we think the stock should find support around $40 (10x, $4.00 EPS), making the risk/reward attractive but contingent on revenue expectations," the analysts added.

MORE ON AMPHENOL AND SENSATA

* Amphenol Corporation Should Continue To Rise Until The AI Race Cools Off [https://seekingalpha.com/article/4916334-amphenol-corporation-should-continue-to-rise-until-the-ai-race-cools-off]
* Amphenol's AI Story Is Real: The 6x Revenue Multiple Is Not [https://seekingalpha.com/article/4916298-amphenols-ai-story-is-real-the-6x-revenue-multiple-is-not]
* Sensata Technologies: Exploring The Opportunities That The AI Boom Brings [https://seekingalpha.com/article/4910416-sensata-technologies-stock-exploring-the-opportunities-that-the-ai-boom-brings]
* Texas Instruments, ON Semiconductor see bullish views at Citi [https://seekingalpha.com/news/4603285-texas-instruments-on-semiconductor-see-bullish-views-at-citi]
* Amphenol likely raising prices due to inflation, shortages: Wedbush [https://seekingalpha.com/news/4603245-amphenol-likely-raising-prices-due-to-inflation-shortages-wedbush]