Analyst Note| William Kerwin |
We are lowering our fair value estimate for narrow-moat Sensata Technologies to $71 from $75 after the company’s second-quarter results missed our revenue and profitability expectations and it lowered its full year guidance. The second half stands to be impacted by continued supply chain challenges, foreign exchange headwinds, and component cost inflation. While we anticipate macroeconomic headwinds to persist through 2022, we view shares as undervalued and attractive to long-term investors. We believe that the current headwinds Sensata faces are short-term in nature, and do not supersede our long-term thesis for growth from high-voltage electric vehicle applications.