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STMicroelectronics NV ADR STM

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

STMicro Is on Track to Hit, if Not Exceed, Its Midterm Revenue Target; Raising FVEs to EUR 33, $40

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

STMicroelectronics reported strong first-quarter results and provided investors with a decent second-quarter outlook. We raise our fair value estimate for narrow-moat ST to EUR 33 per share from EUR 28 (and to $40 from $35 for the U.S. ADRs) and view shares as fairly valued. The firm remains bullish on semiconductor demand throughout the rest of 2021 and expects to reach $12.1 billion of revenue for the full year, which is a target that management didn’t expect to reach until 2023 as of a few months ago but thinks it can hit now because of the snapback in automotive and industrial chip demand. The 2021 forecast appears conservative to us, as ST’s revenue is typically higher in the second half of each year because of seasonality, but we suspect that supply constraints may limit ST’s upside in the next six to 12 months.

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Company Profile

Business Description

A merger between Italian firm SGS Microelettronica and the nonmilitary business of Thomson Semiconductors in France formed STMicroelectronics in 1987. STMicro is a leader in a variety of semiconductor products, including analog chips, discrete power semiconductors, microcontrollers, and sensors. STMicro is an especially prominent chip supplier into the industrial and automotive industries.

Contact
39, Chemin du Champ des Filles, Plan-Les-Ouates
Geneva, 1228, Switzerland
T +41 229292929
Sector Technology
Industry Semiconductors
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type
Employees 46,016

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