Amphenol Corporation

This is our first report on Amphenol Corporation. The company is a well-known designer and manufacturer of electrical, electronic and fiber optic connectors and interconnect systems, antennas, sensors and sensor-based products, and coaxial and high-speed specialty cables. Its second quarter results were significantly better than the Wall Street anticipated in terms of both, revenues as well as earnings. Amphenol’s sales increased by a very impressive 21% in local currencies and 18% in U.S. dollars, setting a new record of $3.137 billion. During the quarter, they closed the acquisition of NPI Solutions and with annual sales of approximately $65 million. Besides, their strong portfolio of advanced connectivity and sensor solutions places the company well across all key defense programs as militaries worldwide continue to deploy a wide range of next-generation defense technologies. While the management anticipates a seasonal low double-digit sequential sales reduction heading into the third quarter, they expect an ongoing and significant increase over the previous year. After two challenging years for the airline sector, Amphenol finally saw quarter of strength in the commercial aviation market. The company should gain from its strong connectivity and sensor technology position across a wide range of aircraft platforms and next-generation technologies integrated into those aircraft as personal and business travel continues to improve. We initiate coverage on the stock of Amphenol with a ‘Hold’ rating.