Sensata Technologies (ST) PT Lowered to $50 at Evercore ISI

Evercore ISI analyst Amit Daryanani lowered the price target on Sensata Technologies (NYSE: ST) to $50.00 (from $60.00) while maintaining a Outperform rating.

The analyst comments "We are updating our FY24 and FY25 model to reflect the sale of the Insights business to an affiliate of Balmoral Funds, which closed September 30th and is now rebranded as Xirgo Technologies. The deal was a total cash consideration of approximately $165M with a non-cash pre-tax charge of ~$95M. Management lowered Dec-qtr guidance to $920-950M (prior $970M1.0B). The transaction was priced sub-1x vs. what we expected at 1- 2x, however we believe will provide a cleaner narrative and is reflective of the company’s strategy on divesting non-core assets and deleveraging to focus on core assets. Our model now has Dec-qtr total revenues at $931 (prior $995) and EPS at $0.80 (prior $0.90). We think there is plenty of UPSIDE potential operationally at ST that the company can unlock either organically or through potential strategic outcomes. Net/net: Although ST faces term headwinds given a challenged automotive environment, we think the company’s path to more consistent execution and added discipline should unlock multiple expansion over the next few years. Specifically, we think there is a path to reach 20% EBIT margins by FY25 assuming they can continue driving 20-30bps incremental margins with FCF conversion improving to >80% vs. ~50% and mix-shift to non-auto sectors (ex. Industrial). Sticking with our OP rating but adjusting our target to $50 (prior $60)."

You May Also Be Interested In

• Fiserv (FISV) PT Lowered to $60 at Freedom Broker
• Stripe, Advent In Talks To Buy Paypal - WSJ
• Active options: TSLA NVDA SPCX MU AAPL AMD INTC AMZN