RBC Capital Cutus Price target on Sensata Technologies (ST) to Reflect Headwinds

RBC Capital reiterated a Sector Perform rating on Sensata Technologies (NYSE: ST), and cut the price target to $45.00 (from $52.00), to reflect headwinds. Volkswagen, ST's largest customer, represents ~7% of revenue. We estimate VW diesel units sold to the U.S. represent <1% of ST's revenue and therefore the U.S.-centric recall should have immaterial financial impact to ST. However, if the issue spreads to Europe (they recall cars/halt new sales) and/or broadly brings to question Diesel viability, that could have a more material impact.

Analyst Amit Daryanani, commented, "We are adjusting our estimates lower on ST for Dec-qtr and CY16 to reflect headwinds within Automotive (China-centric) and softness in their Industrial segments. ST’s implied guide for Dec-qtr calls for 5% q/q growth predicated on China auto stability and uptick in industrial/appliance centric revenues. Given the recent data points – Softer China automotive sales, Industry forecasts taking another leg down and sustained industrial softness (CAT announcement and more), we think it's prudent to think Dec-qtr will be close to flat q/q. As a result our estimates for Dec-qtr now stand at $748M/$0.77 (street at $764/ $0.81). We do think it's prudent to note that EPS could be shielded from – better accretion from Schrader, strength in Europe auto and lower OPEX (curtailment of incentive accruals). Maintain SP and adjusting our target to $45."

For an analyst ratings summary and ratings history on Sensata Technologies click here. For more ratings news on Sensata Technologies click here.

Shares of Sensata Technologies closed at $43.01 yesterday.

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