STMicroelectronics Shares Fall After Guidance Disappoints

   By Mauro Orru 
 

STMicroelectronics shares fell Thursday after the European chip maker set guidance below analysts' expectations for the fourth quarter and slightly tweaked its forecasts for the year.

At 0755 GMT, STMicroelectronics shares traded 1.7% lower at EUR36.50.

The group is targeting net revenue of $4.30 billion and a gross margin of 46% in the current quarter. Citi analysts pointed out in a research note that STMicroelectronics' forecasts are below Visible Alpha consensus of $4.41 billion on revenue and 46.6% on the gross margin.

"Bears may argue this is just the beginning of a crack in ST's fundamentals," they said.

European chip makers have been grappling for months with slowing demand for semiconductors on products such as computers and smartphones. Jochen Hanebeck, chief executive of Germany's Infineon Technologies, said in August that demand from the automotive market remained high, unlike sales for chips on personal electronics devices.

"We believe ST is continuing to see high demand across automotive and industrial verticals, as per comments from peers," Citi analysts said.

STMicroelectronics posted net revenue of $4.43 billion for the third quarter, up 2.5% on the year. The company's automotive business contributed $2.03 billion, though sales at its personal electronics business fell 28% to $990 million.

Still, overall revenue came above Visible Alpha consensus of $4.38 billion, Citi analysts said.

STMicroelectronics is now forecasting net revenue of about $17.3 billion for the year, and a gross margin of about 48.1%. It had previously guided for net revenue of $17.4 billion, plus or minus $150 million, and a gross margin exceeding 48%.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

October 26, 2023 04:16 ET (08:16 GMT)

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