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Sensata (ST) Funds Electrification, IoT Efforts via Qinex Sale

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Sensata Technologies (ST - Free Report) has sold its Qinex semiconductor thermal test and control business to Boyd Corporation for $219 million, including a small secondary closing.

Boyd provides sustainable engineered material and thermal solutions to original equipment manufacturers. Boyd aims to simplify solutions and reduce the carbon footprint in 5G data centers.

Boyd's current semiconductor customers will now have access to cutting-edge controls and thermal test systems necessary for the development of memory and logic devices as a result of this acquisition.

Sensata’s Qinex business produces semiconductor burn-in test sockets and thermal control solutions formed in 2012 through the integration of ST’s semiconductor interconnect business with Wells-CTI.

The Qinex business does not align with Sensata’s vision for growth. The company will use the funds from the divestiture to further grow its Electrification and Insights/Internet of Things business segment.

However, Sensata has entered a contract manufacturing agreement with Boyd to produce Qinex’s products for 6 to 12 months.

Sensata is a global industrial technology company that develops, manufactures and sells innovative sensor-based solutions.

Qinex reported revenues through the Industrials business unit within Sensing Solutions. In first-quarter 2022, Sensing Solutions revenues were $258 million, up 13.2% from the year-ago quarter. The year-over-year improvement was led by the latest electrification launches and revenues from acquisitions.   

In the first quarter, Sensata reported adjusted earnings of 78 cents per share compared with 86 cents in the year-ago quarter. Overall, quarterly revenues aggregated $975.8 million, up 3.5% year over year.

For the second quarter, the Zacks Consensus Estimate for revenues stands at $1.01 billion. The consensus mark for earnings is pegged at 84 cents per share.

The company is facing increased supply chain issues and logistics expenses due to the Russia-Ukraine war and pandemic-induced restrictions. It also operates in markets that are heavily impacted by dynamic technological advancements.

A highly-leveraged balance sheet and increasing competition from low-cost suppliers are further concerns.

Shares of ST have lost 30.3% compared with the industry’s fall of 23.8% in the past year.

Zacks Investment Research
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Zacks Rank & Stocks to Consider

ST carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader technology space are InterDigital Inc. (IDCC - Free Report) , Vishay Intertechnology Inc. (VSH - Free Report) and Broadcom (AVGO - Free Report) . InterDigital and Broadcom currently sport a Zacks Rank #1 (Strong Buy), whereas Vishay Intertechnology holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.90 per share, increasing 27.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 15%.

InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 141.1%. Shares of IDCC have declined 16.2% in the past year.

The Zacks Consensus Estimate for Vishay Intertechnology’s 2022 earnings is pegged at $2.68 per share, rising 10.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 22.7%.

Vishay Intertechnology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 5%. Shares of VSH have declined 22.2% in the past year.

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $37.03 per share, up 3.8% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 14.5%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 2.2%. Shares of AVGO have increased 2.1% in the past year.

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