STMicro: Capital Markets Day Outlines Reasonable Financial Targets for 2028; Shares Undervalued

We maintain our $44/EUR 40 fair value estimate for narrow-moat STMicroelectronics as the company introduced revised financial targets for 2028 at its capital markets day that were largely in line with our prior expectations. ST will fall flat versus its ambitions outlined a couple of years ago, such as hitting $20 billion of revenue, but now hopes these longer-term ambitions will be realized in 2030. We found management’s commentary to be refreshing, as it highlighted growth opportunities while yanking some of its prior targets, such as $5 billion of silicon carbide revenue, that were looking less and less likely. The shares still appear materially undervalued to us, as if ST will be unable to even come close to hitting any of these new 2028 targets.