Company Reports

Narrow-moat STMicroelectronics reported disappointing first-quarter earnings, provided investors with a gloomy second-quarter forecast, and substantially reduced its revenue forecast for 2024. We’ve viewed ST has having an attractive margin of safety for investors and has been a top pick of ours in semis, exactly because overly pessimistic near-term results were baked into the share price. With the stock up 2% on such gloomy news, we surmise that the market was expecting even uglier results. We will trim our fair value estimates to $60 from $66 (and to EUR 56 from EUR 63 for European shares) based on the lower near-term results and modestly less long-term optimism in discrete semis growth, given a likely rise in competition from Chinese chipmakers. Still, we view ST as fundamentally undervalued and think that too much long-term pessimism is baked into shares today. We remain encouraged with ST’s exposure to the automotive chip space, where we still foresee rising chip content per car, especially as electric vehicles become a growing piece of the automotive pie.

STMicroelectronics is one of Europe's largest chipmakers and holds one of the broadest product portfolios in the industry. The company has made structural improvements to its product mix and gross margin profile, which has allowed it to carve out a narrow economic moat. We think ST has some promising growth opportunities on the horizon in microcontrollers and automotive products, including silicon carbide-based semiconductors.

Narrow-moat STMicroelectronics, or ST, is one of our top picks in the technology sector, as our fair value estimates of $66 for U.S. shares and EUR 63 for European shares offer an attractive margin of safety for long-term, patient investors, in our opinion. We continue to like the long-term secular tailwinds in the automotive end market, as ST should profit from increased chip content per car, especially in electric vehicles. The company has also achieved nice gross margin expansion in recent years, and we foresee the company maintaining these margins in the long run.

Narrow-moat STMicroelectronics reported mildly disappointing fourth-quarter results and provided investors with a soft outlook for the first quarter and for all of 2024, even when considering the company’s expectations for a strong recovery in demand in the second half of the year. The guidance appears reasonable to us considering the weak forecast provided by peer Texas Instruments earlier this week, and we might be a bit more cautious than ST’s management when thinking about a second-half recovery. Still, ST has healthy bookings in automotive and more important, strong long-term secular tailwinds in automotive behind it. We maintain our $66 fair value estimate (EUR 63) for ST and continue to view shares as undervalued for long-term, patient investors willing to ride out the latest downturn in broad-based semis.

We visited STMicro’s product demonstrations at CES 2024 and remain confident in the health and innovation of the company’s broad product portfolio across analog, microcontrollers (MCUs), digital processors, and power semiconductors, including wide bandgap semis with improved performance, such as power products based on silicon carbide (SiC) and gallium nitride (GaN). We maintain our fair value estimates of $66 and EUR 63 for narrow-moat ST and continue to view shares as undervalued. Although we see cautionary signs in automotive semis, such as Mobileye’s recent earnings warning, we still foresee ST as a long-term, secular winner in auto, particularly in SiC.

Narrow-moat STMicroelectronics reported solid third-quarter results. The firm’s fourth-quarter outlook was a bit weak because of headwinds in its industrial business, in line with comments from rival Texas Instruments earlier this week, but we’re encouraged by STMicroelectronics’ optimism and visibility into automotive chip growth in 2024. Longer term, we’re confident in STMicroelectronics' strong position in the secular trend toward higher chip content per car, especially in electric vehicles. We maintain our fair value estimate of $66 per U.S. share, while raising our fair value on French shares to EUR 63 from EUR 60, based on currency effects. We continue to view STMicroelectronics' shares as materially undervalued, especially for long-term, patient investors willing to ride out the cyclical downturn in the industrial end market.

STMicroelectronics is one of Europe's largest chipmakers and holds one of the broadest product portfolios in the industry. The company has made structural improvements to its product mix and gross margin profile, which has allowed it to carve out a narrow economic moat. We think STMicroelectronics has some promising growth opportunities on the horizon in microcontrollers and automotive products, including silicon carbide-based semiconductors.

Narrow-moat STMicroelectronics sparkled with solid second-quarter results and a promising outlook for the rest of the year, as the company continues to perform well in automotive chip revenue. We raised our fair value estimates to $66 from $59 for U.S. shares (EUR 60 from EUR 55 for European shares), which would equate to a 2023 price/earnings ratio of 15 times. We still view the company as modestly undervalued.

STMicroelectronics is one of Europe's largest chipmakers and holds one of the widest product portfolios in the industry. The company has made structural improvements to its product mix and gross margin profile, which has allowed it to carve out a narrow economic moat. We think STMicroelectronics has some promising growth opportunities on the horizon in microcontrollers and automotive products, including silicon carbide-based semiconductors.

Narrow-moat STMicroelectronics reported solid first-quarter results and provided investors with a healthy forecast for the second quarter and all of calendar 2023, as the company remains well positioned to prosper from resilient chip demand in the automotive and industrial end markets. We maintain our $59/EUR 55 fair value estimate and view the company as undervalued. The shares dipped by as much as 9% after the release, which we suspect was a response to lower revenue coming from Apple later in the year, but we view the April 27 selloff as overdone.

Narrow-moat STMicroelectronics reported solid fourth-quarter results and provided investors with a surprisingly rosy forecast for the first quarter and all of 2023. We're raising our fair value estimate to EUR 55/$59 from EUR 50/$50 based on the time value of money as we roll our valuation model, but also because we see a clearer path to ST achieving its key long-term targets of $20 billion of revenue and 50% gross margins. The shares are up about 8% after the release, but we still see an attractive margin of safety for investors.

STMicroelectronics is one of Europe's largest chipmakers and holds one of the broadest product portfolios in the industry. The company has made structural improvements to its product mix and margin profile, which has allowed it to carve out a narrow economic moat. We think ST has some promising growth opportunities on the horizon in microcontrollers, sensors, and automotive products, including silicon carbide-based semiconductors.

Narrow-moat STMicroelectronics reported strong third-quarter results and provided investors with a decent fourth-quarter forecast. Chip demand from automotive and business-type industrial customers (such as factory automation equipment) remains robust, but the company is predictably seeing softness in personal electronics and consumer-type industrial products (such as power tools and home appliances). The weakness in consumer-type industrial products is new for the sector this quarter and was first signaled by ST’s peer, Texas Instruments, earlier this week.

STMicroelectronics is one of Europe's largest chipmakers and holds one of the broadest product portfolios in the industry. We are pleased to see the company make structural improvements to its product mix and margin profile, which has allowed it to carve out a narrow economic moat. We think ST has some promising growth opportunities on the horizon in microcontrollers, sensors, and automotive products, including silicon carbide-based semiconductors.

Narrow-moat STMicroelectronics reported strong second-quarter results and provided investors with an outstanding forecast for the rest of 2022, hinting at good times into 2023 as well. The company is firing on all cylinders, with expanding capacity in order to satisfy hearty automotive and industrial chip demand, favorable pricing on its products, and even a weaker euro (relative to the U.S. dollar) contributing to operating margin expansion. We've raised our fair value estimate to $56/EUR 55 per share from $53/EUR 51. Even though these good times may not last forever, we still view the shares as significantly undervalued.

STMicroelectronics is one of Europe's largest chipmakers and holds one of the broadest product portfolios in the industry. We are pleased to see the company make structural improvements to its product mix and margin profile, which has allowed it to carve out a narrow economic moat, in our view. We think ST has some promising growth opportunities on the horizon in microcontrollers, sensors, and automotive products, including silicon carbide-based semiconductors.

Narrow-moat STMicroelectronics', or ST's, 2022 capital markets day stunned us, as the firm outlined bold "ambitions" for its 2025-2027 financial performance that were well above the tail end of our prior five-year projections. We raise our fair value estimate to $53 from $47 (to EUR 51 from EUR 45) as we are a bit more optimistic about gross margin expansion as the firm provided more details into its product mix and manufacturing expansion plans, which we think are sustainable. In turn, we think there is an attractive margin of safety for investors today. However, our model assumes ST will reach its revenue ambition in 2027 but will fail to hit any of its profitability metrics even five years from now. We think ST would have to fire on all cylinders for the next three to five years with no bouts of macroeconomic headwinds or cyclical downturns to reach its targets, and we view significant upside to ST's shares if it can in fact deliver on its ambitions by 2025.

STMicroelectronics is one of Europe's largest chipmakers and holds one of the broadest product portfolios in the industry. We are pleased to see the company make structural improvements to its product mix and margin profile, which has allowed it to carve out a narrow economic moat, in our view. Looking ahead, we think ST has some promising growth opportunities on the horizon in microcontrollers, sensors, and automotive products, including silicon carbide-based semis.

Narrow-moat STMicroelectronics reported sold first-quarter results and provided investors with a relatively upbeat second-quarter forecast while maintaining its full-year revenue outlook. Unlike its rival Texas Instruments, which provided downbeat second-quarter guidance April 26, ST does not anticipate a material destruction in demand associated with COVID-19 restrictions in China. ST might be one of the biggest beneficiaries of the global chip shortage, as healthy factory utilization and a very favorable pricing environment have enabled the firm to generate outstanding gross margin expansion. We raise our fair value estimate of European shares to EUR 45 from EUR 42 due solely to currency effects, while maintaining our $47 fair value for U.S. shares. Both sets of shares continue to appear undervalued to us.

STMicroelectronics is one of Europe's largest chipmakers and holds one of the broadest product portfolios in the industry. We are pleased to see the company make structural improvements to its product mix and margin profile, which has allowed it to carve out a narrow economic moat, in our view. Looking ahead, we think ST has some promising growth opportunities on the horizon in microcontrollers, sensors, and automotive products, including silicon carbide-based semis.