Analyst Note| William Kerwin |
Sensata posted a strong end to a challenging year, as the top line exceeded our forecast and the FactSet consensus estimate by a healthy margin. As global economic activity picks up, after a year marred by pandemic-induced business slowdowns, Sensata has reported robust demand across its verticals with particular strength visible in the Automotive and Industrial segments. Sensata stands to benefit from the secular trend toward electrification in 2021 and beyond, a strategy underscored by the firm’s acquisition of Denmark-based Lithium Balance earlier this year. We expect this strategy to underscore growth for the firm and maintain our $50 fair value estimate for narrow-moat Sensata. At current valuations, we view shares as marginally overvalued.