Sensata (NYSE:ST) has been outperforming sell-side expectations and converting sell-side skeptics to believers, leading to a 40%-plus increase in the average Street price target since my last update, but it hasn’t really helped
Sensata Executing And Building A Long-Term Growth Story, But Still Undervalued
Summary
- Sensata has reported some solid quarters, but the market hasn't liked management's conservative guidance for lower auto builds and inventory destocking.
- Not only has Sensata built a better EV portfolio than commonly appreciated, that portfolio includes attractive high-voltage components.
- Telematics, asset tracking, and commercial aerospace are all underappreciated potential growth drivers, with insurers likely to push for more vehicle tracking in exchange for rate relief.
- Sensata shares look undervalued on 5% long-term revenue growth and 10% long-term FCF growth, with 10% to 20% near-term upside.
Stephen Simpson is a freelance financial writer and investor.Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds).
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