Sensata Earnings: Our Long-Term Thesis Is Intact Following Good Results and a Management Shakeup

We maintain our $69 fair value estimate for shares of narrow-moat Sensata Technologies after positive first-quarter results and second-quarter guidance leave our long-term thesis intact. Sensata’s second-quarter guidance was above our model, but its updated full-year expectations align with our forecast. Sensata also announced the retirement of its current CEO and that activist investor Elliott Management has gained a board seat. Shares soared 17% following the release, which we attribute to positive expectations for new leadership. We continue to see shares as undervalued. We’re optimistic that a new CEO can unlock shareholder value via better execution and strategic focus. Sensata is well-positioned to capitalize on long-term automotive electrification, in our view, and we believe a new CEO and activist influence will drive a more concentrated focus on this opportunity.