On Thursday, Oppenheimer adjusted its stance on Littelfuse Inc (NASDAQ:LFUS), elevating the stock from Perform to Outperform and setting a price target of $310.00. The firm's action reflects a positive outlook on the company's earnings potential.
The upgrade is based on a projected earnings per share (EPS) for the year 2025, with Oppenheimer anticipating LFUS will achieve $11.50 EPS, which is above the Street's estimate of $11.15. This forecast is set against the backdrop of the company's historical performance, where Littelfuse has consistently shown the ability to expand its peak EPS from one cycle to the next.
Oppenheimer's analysis suggests that while LFUS is currently trading at 31 times the firm's estimated EPS for 2024, a multiple contraction to 27 times is expected by the target year. The price target implies confidence in the company's future growth, as the current estimate for 2024 EPS stands at $8.30, slightly above the Street's consensus of $8.20.
The firm also noted Littelfuse's track record of significant EPS increases over various cycles, citing a 143% rise from 2007 to 2011, a 130% increase from 2011 to 2018, and a 79% growth from 2018 to 2022. Despite a current estimated EPS for 2024 that is 51% lower than the peak in 2022, past peak-to-trough performances of the company have shown resilience with fluctuations ranging from a 64% decline in 2009, a minimal 7% in 2012, to a 32% reduction in 2020.
The analyst's commentary underscores a belief that Littelfuse is in a strong position to surpass its 2022 EPS peak in the coming years, indicating an optimistic view of the company's ability to outperform its last earnings peak. The upgrade and new price target reflect expectations of continued financial growth and profitability for Littelfuse.
In other recent news, Littelfuse Inc. has been the focus of several analyst adjustments. Baird maintained an Outperform rating on the company but lowered the price target to $307.00, citing an anticipated positive inflection in the semiconductor sector and ongoing integration of Carling Technologies. Similarly, Baird raised the price target to $315 from $300, highlighting the recovery of the Passive Electronics sector.
Stifel upgraded Littelfuse stock from 'Hold' to 'Buy', adjusting the price target to $280, noting signs of a turnaround in the component cycle. Conversely, TD Cowen maintained a 'Hold' rating but increased the share target to $260, acknowledging Littelfuse's ability to exceed expectations despite a cautious outlook.
These recent developments follow Littelfuse's Q2 2024 performance, which featured a revenue of $558 million and $50 million in free cash flow. The company also showcased a robust balance sheet with $562 million in cash and a net debt-to-EBITDA leverage of 1.6 times.
Both Stifel and Littelfuse highlighted the potential for growth through mergers and acquisitions. These facts provide a snapshot of Littelfuse's recent performance and analyst expectations.
InvestingPro Insights
Oppenheimer's optimistic outlook on Littelfuse Inc (NASDAQ:LFUS) aligns with several key metrics and insights from InvestingPro. The company's financial health appears robust, with InvestingPro Data showing a Market Cap of $6.36 billion and a P/E Ratio of 32.89, which is in line with Oppenheimer's valuation analysis.
InvestingPro Tips highlight that Littelfuse "has raised its dividend for 14 consecutive years" and "has maintained dividend payments for 15 consecutive years," underscoring the company's commitment to shareholder returns. This consistent dividend growth, coupled with a current Dividend Yield of 1.09%, supports the view of Littelfuse as a stable investment.
While Oppenheimer projects future EPS growth, it's worth noting that InvestingPro Tips indicate "Net income is expected to drop this year." However, the company remains "Profitable over the last twelve months" and "Analysts predict the company will be profitable this year," which aligns with Oppenheimer's long-term positive outlook.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Littelfuse, providing a deeper understanding of the company's financial position and future prospects.
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