Sensata Earnings: We Lower Fair Value Estimate to $69 on Weaker Near Term, but Continue to See Long-Term Value

We trim our fair value estimate for shares of narrow-moat Sensata Technologies to $69, from $71, to reflect a weaker fourth-quarter guide and expectations for a soft 2024. Sensata's fourth-quarter guidance missed our expectations due to a higher impact management is baking in from ongoing worker strikes at US automakers. We also anticipate soft industrial markets to persist into 2024, along with moderating automotive growth overall. Still, we see shares as deeply undervalued. We continue to think the market is missing Sensata's long-term opportunity in electrification, its design win momentum to this end, and its resulting growth potential over the next five years.