STMEF - STMicroelectronics: Attractive Risk/Reward After Guidance Cut

2024-05-14 08:50:19 ET

Summary

• The semis market environment has further deteriorated. Still, STMicroelectronics shows a strong price discipline and a cost-resilient business model.
• Here at the Lab, we believe Industrial and Automotive segments are sufficiently de-risked.
• We see three reasons to reiterate our overweight target.

In early January 2024, we reported three main risks to STMicroelectronics ( STM ) and decided to lower the company's 12-month target price to €57 per share. As a reminder, we anticipated Mobileye's revenue warning impact, unfavorable FX, and a slowdown in consumer demand. For our new readers, the company is one of the top ten largest global semi-vendors by sales. STM was incorporated in 1987 as the combination of Thomson Semiconducteurs and SGS Microelettronica. After a restructuring period, the company is now engaged in various products (MEMS and AM&S, P&D, MCU, and D&RF) across the automotive, industrial, personal, and consumer electronics markets (Fig 1)....

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