Sensata Technologies (NYSE:ST) Generating Strong FCF, Valuation Attractive

Sensata Technologies (NYSE:ST) continues to generate strong free cash flow, says Barclays, and their valuation remains attractive.

Barclays noted, "End of the lockup period could keep buyers on the sidelines near-term, but we believe valuation remains attractive: Currently trading at about 14.6x our 2011 EPS estimate of $2.05, we think the company's strong growth profile, ability to generate solid free cash flow, and upside from accretive acquisitions warrant a $35 price target.

"ST continues to generate strong FCF and delever: The company generated $80.5M of free cash flow in the quarter, and exited 2010 with a leverage ratio of 3.1x, down from 3.4x in 3Q10. Management is targeting 2-3x by the end of 2011."

Barclays reiterates an "Overweight" rating on Sensata Technologies (ST), which closed Tuesday at $29.79, down $0.04, or 0.13 percent.