Wells Fargo has initiated its coverage of Sensata Technologies (ST, Financial) with an Equal Weight rating, setting a price target of $20. This assessment stems from concerns over tariffs and inherent challenges faced by the company in its primary markets. Despite Sensata's current trading price reflecting a significant discount compared to its historical trading multiple, Wells Fargo recommends a cautious approach due to perceived short-term risks.
The financial firm notes concerns about Sensata's growth prospects, particularly pointing to the company's limited contributions to the electric vehicle sector in key markets such as Europe and China. This "weak" position in emerging vehicle technologies is viewed as a potential hindrance to short-term growth, further influencing Wells Fargo's neutral stance on the stock at this time.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for Sensata Technologies Holding PLC (ST, Financial) is $32.30 with a high estimate of $45.00 and a low estimate of $23.00. The average target implies an upside of 49.25% from the current price of $21.64. More detailed estimate data can be found on the Sensata Technologies Holding PLC (ST) Forecast page.
Based on the consensus recommendation from 15 brokerage firms, Sensata Technologies Holding PLC's (ST, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Sensata Technologies Holding PLC (ST, Financial) in one year is $37.64, suggesting a upside of 73.94% from the current price of $21.64. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Sensata Technologies Holding PLC (ST) Summary page.
ST Key Business Developments
Release Date: February 11, 2025
- Revenue (Q4 2024): $908 million, exceeding guidance range of $870 million to $900 million.
- Revenue (Full Year 2024): $3.93 billion, a 3% decrease from $4.05 billion in 2023.
- Adjusted Operating Margin (Q4 2024): 19.3%, up 80 basis points from 18.5% in Q4 2023.
- Adjusted Operating Income (Full Year 2024): $749 million, representing a margin of 19%.
- Adjusted Earnings Per Share (Q4 2024): $0.76, compared to $0.81 in Q4 2023.
- Adjusted Earnings Per Share (Full Year 2024): $3.44, compared to $3.61 in 2023.
- Free Cash Flow (Full Year 2024): $393 million, a 44% increase year-over-year.
- Free Cash Flow Conversion (Full Year 2024): 76% of adjusted net income, up from 49% in 2023.
- Net Leverage (End of 2024): Reduced to under 3x for the first time in three years.
- Performance Sensing Revenue (2024): $2.74 billion, roughly flat year-over-year.
- Sensing Solutions Revenue (2024): $1.06 billion, an 8% decrease year-over-year.
- Performance Sensing Operating Margin (2024): 24.6%, an 80 basis point decrease year-over-year.
- Sensing Solutions Operating Margin (2024): 29.5%, a 30 basis point increase from 2023.
- Adjusted Operating Expenses (2024): $264 million, roughly flat year-over-year.
- Capital Returned to Shareholders (2024): $72 million through dividends and $69 million through share repurchases.
- Return on Invested Capital (2024): 10.2%, up from 9.7% in 2023.
- Q1 2025 Revenue Guidance: $870 million to $890 million.
- Q1 2025 Adjusted Operating Margin Guidance: 18.2% to 18.4%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sensata Technologies Holding PLC (ST, Financial) exceeded its revenue guidance for the fourth quarter of 2024, reporting $908 million compared to the expected range of $870 million to $900 million.
- The company improved its free cash flow conversion significantly, reaching 76% of adjusted net income, up from 49% in 2023.
- Net leverage was reduced to under 3x for the first time in three years, demonstrating strong financial management.
- Sensata's Performance Sensing segment showed resilience with revenue of $2.74 billion in 2024, outperforming the automotive and heavy vehicle end markets.
- The company successfully implemented restructuring activities to streamline processes, reduce overhead expenses, and consolidate facilities, enhancing operational efficiency.
Negative Points
- Overall revenue for 2024 decreased by approximately 3% to $3.93 billion, compared to $4.05 billion in 2023.
- The Sensing Solutions segment experienced an 8% year-over-year revenue decline, indicating challenges in the industrial and aerospace markets.
- Adjusted earnings per share for the fourth quarter of 2024 were $0.76, down from $0.81 in the same period of the previous year.
- The company anticipates flat organic revenue growth for 2025, reflecting ongoing market challenges and weak end markets.
- Foreign currency headwinds and normal seasonality are expected to impact revenue in the first quarter of 2025, with guidance set between $870 million to $890 million.
