Why Sensata Technologies (ST) Shares Are Plunging Today

What Happened:

Shares of sensor manufacturer Sensata Technology (NYSE:ST) fell 9.4% in the afternoon session after the company reported second-quarter results and provided revenue guidance for the next quarter, which came in below Wall Street's expectations. The company highlighted macro challenges with the CFO adding, "We anticipate our end markets to be relatively flat year over year given the current IHS automotive outlook, weakness in Europe and North America heavy vehicle and off road production, and continued destocking in industrials," As a result, Sensata expects revenue to be "flat to down slightly in the first and second quarters of 2024 before rebounding in the second half of the year." 

On the other hand, revenue exceeded expectations during the quarter. Inventory levels also improved. Overall, this was a mixed quarter, with the weak guidance likely to raise concerns among investors.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Sensata Technologies? Access our full analysis report here, it's free.

What is the market telling us:

Sensata Technologies's shares are not very volatile than the market average and over the last year have had only 4 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 7 days ago, when the company gained 5.5% on the news that Oppenheimer analyst Christopher Glynn upgraded the stock's rating from Perform (Hold) to Outperform (Buy) and assigned a price target of $50. The new price target represents a potential 35% upside from where shares traded when the upgrade was announced. The analyst added, "Our upgrade focuses on significant ramp in new business wins over the past several years, capital allocation pivot to debt reduction, and solid positioning for margin performance."

Sensata Technologies is down 11.4% since the beginning of the year, and at $32.85 per share it is trading 38.1% below its 52-week high of $53.07 from February 2023. Investors who bought $1,000 worth of Sensata Technologies's shares 5 years ago would now be looking at an investment worth $674.77.

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