Sensata Earnings: We Lower Our Valuation Behind Soft Short-Term Demand and Business Exits

We lower our fair value estimate for shares of narrow-moat Sensata Technologies to $58 per share from $64 as we bake in a weaker short-term demand environment and multiple business exits. We continue to see Sensata as well-positioned for growth from electrification across transportation and industrial markets in the long term. However, we believe ongoing weaker demand in these markets will keep weighing on revenue through 2025. Additionally, Sensata is exiting both its Insights business and certain low-margin product lines across its core markets, which will hamper results in the short term. In the long term, we believe these exits help focus the business in the right direction. We like Sensata’s renewed focus on electrification, from which it derives its moat. We continue to see Sensata as a deep value play, with design win momentum that should drive better results between 2026 and 2028. However, we don’t see significant positive catalysts in the short-term.