Sensata Technologies (ST) Stock Trades Up, Here Is Why

What Happened:

Shares of sensor manufacturer Sensata Technology (NYSE:ST) jumped 20.4% in the pre-market session after the company reported first quarter results which exceeded analysts' EPS expectations. Its revenue also outperformed Wall Street's estimates. That guidance for next quarter was in line with expectations shows that this company is on track. The company also announced the retirement of CEO and President Jeff Cote; Martha Sullivan was Appointed Interim President and CEO. Also, in consultation with activist investors, Elliott Investment Management, Sensata appointed Phillip Eyler to the Company's Board. Phillip Eyler will serve on the CEO Search Committee and the Nominating and Governance Committee when he joins the Board on July 1, 2024. Zooming out, we think this was still a decent, albeit mixed, quarter.

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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%. But moves this big are very rare even for Sensata Technologies and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the company dropped 9.4% on the news that 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 and EPS 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.

Sensata Technologies is up 5.4% since the beginning of the year, but at $39.06 per share it is still trading 17.2% below its 52-week high of $47.18 from July 2023. Investors who bought $1,000 worth of Sensata Technologies's shares 5 years ago would now be looking at an investment worth $783.34.

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