Sensata Earnings: Tough Sledding Continuing Into 2024, but Shares Remain Cheap for Long-Term Buyers

We maintain our $69 fair value estimate for shares of narrow-moat Sensata Technologies after it reported fourth-quarter results and gave an outlook for 2024 that both matched our expectations. Sensata continues to deal with softer end market demand that has weighed on results in the past two years and appears set to continue through 2024. Despite short-term challenges, we continue to like the firm’s focus on electrification and expect this to contribute to higher growth in the long run. With this long-term view, we continue to see significant upside for investors with a longer time horizon. We don’t see catalysts to the stock in 2024 but expect a positive inflection in 2025 and 2026 when the firm’s electrification business wins contribute more meaningfully to revenue.