Reiterating his bullish case for Amphenol Corporation (APH), Zacks equity
analyst Mario Ricchio explains why he is advising investors to add the shares of the company to their portfolio:
'We expect Amphenol Corporation to report third quarter EPS of $0.46, up 21.1% year-over-year, amid strong end-market demand (particularly mobile devices and infrastructure and IT and Datacom), lower SG&A expenses as a percentage of sales, improving interconnect margins and increasing contribution from the Teradyne's Connection Systems (TCS) acquisition.
'Fiscal year 2007 earnings should receive an added boost from sales and cost synergies related to the TCS acquisition and our expectations of operating margin expansion. Amphenol Corporation currently trades at 21.8x our 2007 earnings estimate of $1.83 per share, above the industry median multiple of 19.7. We believe the company's premium P/E multiple relative to the industry is justified based on a higher forward growth rate than peers.
'Our target price is $43.00 per share or around 23.5x our FY07 EPS estimate of $1.83. From the current price of $39.84 per share, the capital appreciation potential equals approximately 8%. Given the upside in the stock, we suggest investors add shares of APH to their portfolio.'
Read the full analyst report on APH
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