Tristan Gerra, an analyst from Robert W. Baird, maintained the Hold rating on STMicroelectronics (STM – Research Report). The associated price target is $35.00.
Tristan Gerra has given his Hold rating due to a combination of factors concerning STMicroelectronics’ financial outlook and industry trends. The analyst notes a weakening in automotive and industrial demand, which raises questions about the anticipated second-half recovery. This downturn, which started in the latter part of the third quarter of the previous year, is not expected to hit its low point for several quarters. Furthermore, Gerra points to a significant downward revision in the company’s full-year revenue and gross margin outlook, alongside unchanged capital expenditures, which signals potential challenges ahead for the company’s profitability.
Additionally, while the first half of 2024’s revenue outlook was less than anticipated, which might indicate a stabilization, the shape of the recovery expected in the second half remains uncertain. This is compounded by a more pronounced weakness in industrial demand than management anticipated, with a faster inventory correction, and a further slowdown in automotive demand, including reduced backlog and lower electric vehicle (EV) production forecasts from customers. The report also mentions concerns about pricing pressures and inventory levels, along with actual reported earnings that fell short of expectations, all of which contribute to Tristan Gerra’s decision to maintain a Hold rating on STMicroelectronics.
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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.
