Sensata Technologies Faces Challenges Navigating EV Headwinds, Goldman Sachs Analyst Warns
Portfolio Pulse from Nabaparna Bhattacharya
Goldman Sachs analyst Mark Delaney downgraded Sensata Technologies (NYSE:ST) to Neutral from Buy, lowering the price forecast to $36 from $44, citing slower revenue growth in its North American auto business tied to EVs. Delaney highlighted weaker near-term EV sales and delays in certain EV launches by traditional OEMs as key challenges. Despite Sensata having a higher content in battery electric vehicles compared to internal combustion engine vehicles in North America, challenges in China and recent delays in EV production by Ford (NYSE:F) add risk and uncertainty for Sensata. The analyst also noted Sensata's declining margins and predicts the stock will trade at a lower multiple while fundamentals are pressured.
April 09, 2024 | 6:23 pm
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NEGATIVE IMPACT
Goldman Sachs downgraded Sensata Technologies to Neutral from Buy and lowered the price forecast to $36 from $44 due to EV headwinds and slower revenue growth in its North American auto business.
The downgrade by Goldman Sachs directly impacts Sensata Technologies' stock as it reflects a negative outlook on the company's near to intermediate-term revenue growth, especially in the North American auto business tied to EVs. The lowered price forecast also suggests a bearish view on the stock's valuation.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
NEUTRAL IMPACT
Ford's announcement of delaying production of its 3-row SUV EV and new EV pickup adds risk and uncertainty for suppliers like Sensata Technologies.
While the news directly pertains to Ford's production schedule, it indirectly impacts Sensata Technologies by adding risk and uncertainty to its supply chain and future revenue from Ford's EV projects. However, the immediate impact on Ford's stock is neutral as the delays have been announced and factored in.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 60