Truist cuts TE Connectivity stock price target on datacenter concerns

Truist lowered TE Connectivity's price target to $240 from $244 while keeping a Hold rating, citing flat datacenter and AI revenue, a reduced view of the company's datacenter networking opportunity, and a recent share run-up. Management delivered roughly in-line fiscal Q1 results and a slightly above-consensus Q2 outlook, and Truist raised its 2027 EPS estimate to $12.95 from $12.51. In separate Q2 FY2026 results, TE beat EPS by $0.05 and revenue by $10 million, but the stock still sold off about 12% after the earlier results.

Analysis

The market is treating TEL like a “good enough” industrial that is no longer entitled to a premium multiple for AI adjacency. That’s the right lens: if datacenter networking revenue is flattening just as sell-side enthusiasm pegs it as the next growth leg, the stock can derate faster than fundamentals can reaccelerate, especially after a prior run-up. The key second-order issue is that TE’s mix is still tied to capex budgets that are becoming more selective, so even modest order improvement may not translate into multiple expansion until customers prove the next wave is not just inventory digestion.

The contrarian point is that the selloff may have already priced in a more severe deceleration than the business is actually seeing. A higher EPS estimate alongside a lower target tells you the debate is not near-term earnings quality but terminal growth assumptions; if management prints even one quarter of sequential improvement in scale-out or optics, the stock could re-rate sharply because positioning is likely lighter after the drop. That creates a tactical asymmetry: fundamentals do not need to reaccelerate dramatically, only to stop disappointing.

For EVR, the cleaner read is that its upside is tied less to quarter-specific performance than to how much M&A and issuance activity the market expects over the next 3–6 months. If broader risk sentiment stays choppy, advisory and underwriting momentum can lag even when absolute deal activity is healthy, so the stock may remain a hostage to macro headlines rather than company execution. The consensus is probably underweighting how quickly transaction-sensitive financials can inflect if rates stabilize and boards regain confidence.

Key Decisions for Investors

• Short-term: buy TEL weakness only if it holds above the post-earnings gap low; use a 4–8 week horizon for a mean-reversion trade, targeting a 8–12% rebound if another order-positive update lands.
• For longer duration, avoid initiating a fresh outright long in TEL until a second sequential improvement in datacenter/AI revenue is visible; otherwise the stock remains a value trap with a compressed catalyst window over the next 1–2 quarters.
• Pair trade: long TEL / short a higher-multiple networking peer on any further rally if the market continues to pay for AI optionality; this captures relative multiple convergence if TEL’s core industrial and connector businesses stabilize.
• For EVR, consider a tactical long only into signs of improving M&A chatter or lower-rate expectations over the next 1–3 months; upside is better on sentiment inflection than on one-quarter earnings prints.
• If TEL breaks below the post-report support on heavier volume, use put spreads rather than outright shorts to define risk; the stock’s downside can extend another 5–10% quickly if the market revisits AI-exposure skepticism.