Analyst Christopher Rolland of Susquehanna reiterated a Buy rating on STMicroelectronics (STM – Research Report), with a price target of $55.00.
Christopher Rolland has given his Buy rating due to a combination of factors including STMicroelectronics’ long-term prospects in the semiconductor industry, despite a near-term downturn. Rolland acknowledges the disappointing yet expected guidance reduction for the fiscal year 2024, reflecting the current weakness in the automotive and industrial sectors. He anticipates the second half of the year to show a strong recovery, particularly as demand in the semiconductor sector is cyclical and a bottoming out is expected in Q2. Rolland also notes the lowered guidance for Silicon Carbide (SiC) revenue, largely due to Tesla’s revised production plans, but remains optimistic about a rebound in 2025, driven by STMicroelectronics’ target for increased internal substrate production.
Furthermore, Rolland believes that STMicroelectronics’ risks are well-reflected in the new guidance, and that the company is well-positioned to capitalize on significant opportunities in SiC, Gallium Nitride (GaN), and 32-bit microcontroller units (MCUs). He highlights the company’s strong relationships with key customers such as Tesla, Mobileye, Apple, and Starlink, which could lead to substantial growth in the coming years. Rolland’s confidence in STMicroelectronics’ future is reflected in his reiteration of a positive outlook and a price target that suggests a considerable upside from the current valuation, underscoring the stock’s potential for growth amid the current industry downcycle.
In another report released yesterday, Craig-Hallum also reiterated a Buy rating on the stock with a $48.00 price target.
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STMicroelectronics (STM) Company Description:
Founded in 1987 and based in Switzerland, STMicroelectronics NV develops, manufactures, and markets semiconductor products in Europe, the Middle East, and Africa (EMEA), the Americas, and the Asia Pacific. It operates through the following segments: Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group.
