STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and sells semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The Automotive and Discrete Group segment offers automotive integrated circuits (ICs), and discrete and power transistor products. The Analog, MEMS and Sensors Group segment provides industrial application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs); general purpose analog products; custom analog ICs; wireless charging solutions; galvanic isolated gate drivers; low and high voltage amplifiers, comparators, and current-sense amplifiers; MasterGaN, a solution that integrates a silicon driver and GaN power transistors in a single package; wireline and wireless connectivity ICs; touch screen controllers; micro-electro-mechanical systems (MEMS) products, including sensors or actuators; and optical sensing solutions. The Microcontrollers and Digital ICs Group segment offers general purpose and secure microcontrollers; and radio frequency (RF) products. It also offers application-specific standard products for analog, digital and mixed-signal applications. In addition, the company provides assembly and other services. It sells its products through distributors and retailers, as well as through sales representatives. The company serves automotive, industrial, personal electronics and communications equipment, and computers and peripherals markets. STMicroelectronics N.V. was incorporated in 1987 and is headquartered in Geneva, Switzerland.

STMicroelectronics (STM) Company Performance

STMicroelectronics STM shares have plunged 51.2% on a year-to-date (YTD) basis against the Zacks Semiconductor-General industry and the Zacks Computer & Technology sector’s return of 132.2% and 27.4%, respectively.
Over the same time frame, shares of its competitors, including NVIDIA NVDA, Amtech Systems ASYS, and Texas Instruments TXN, have climbed 186.6%, 36.9% and 16.1%, respectively.
This underperformance can be attributed to the deterioration in customer backlogs and order entry during the third quarter. STM asserts that it reflects a clear shift in customers’ priorities, moving decisively from fully battery electric vehicles to hybrids, and transitioning from premium to economy models. Furthermore, car manufacturers are actively downsizing production to manage inventory levels effectively.
Softness in Power & Discrete and Microcontrollers was primarily affected by ongoing weakness in the Industrial end market, which negatively impacted top-line growth. In the first nine months of 2024, the company generated total revenues of $9.95 billion, down 23.5% from the same period in 2023.
For the fourth quarter of 2024, STM expects revenues of $3.32 billion at the midpoint, indicating a year-over-year decline of 22.4%. The Zacks Consensus Estimate is pegged at $3.32 billion, indicating a year-over-year decline of 22.5%.
Gross margin is expected to be about 38% at the midpoint, impacted negatively by about 400 basis points, mainly due to the combination of product mix and sales price and higher unused capacity charges. The consensus mark for earnings is pegged at 35 cents per share, down 18.6% in the past 30 days. This indicates a year-over-year decline of 69.3%.
Full-year 2024 revenues are expected to be $13.27 billion, indicating a decline of about 23.2% year over year, mainly due to lower revenues in Automotive and to a lesser extent lower revenues in Industrial, partly offset by slightly better revenues in Personal Electronics. The consensus mark for revenues is pinned at $13.27 billion.
The consensus mark for earnings is pegged at $1.65 per share, down by a penny over the past 60 days, indicating a fall of 63%.
The gross margin is expected to be about 39.4%, negatively impacted by approximately 290 basis points of unused capacity charges.
Hence, STMicroelectronics anticipates a delayed recovery in the Industrial end market and a lower-than-expected increase in Automotive end market revenues in the second half of the year versus the first half.

STMicroelectronics announces long-term goals

STMicroelectronics announces long-term targets at Capital Markets Day
STMicroelectronics N.V. (NYSE:STM) makes and sells semiconductor products. The company has long-term exposure to structural growth areas such as the energy transition, data centers, and microcontrollers. On November 20, the firm hosted its Capital Markets Day in Paris. The chipmaker reiterated its $20 billion plus revenue ambition and associated financial model, which it now expects to be reached by 2030. The firm also set an intermediate financial model with revenues expected around $18 billion with an operating margin within a 22% to 24% range in 2027-2028.

STMicroelectronics stock rating

STMicroelectronics
Morningstar Price/Fair Value: 0.57
Morningstar Uncertainty Rating: High
Morningstar Economic Moat Rating: Narrow
Industry: Semiconductors
STMicroelectronics is a chip supplier for the automotive and industrial industries. It has lost its top spot but still makes our list as one of the most undervalued tech stocks. The chipmaker is trading 43% below our fair value estimate of $44 per share.
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.
ST didn’t always have the best track record, regularly failing to earn robust profitability a decade ago owing to investments in money-losing digital chip businesses and share loss in other chip products, among other stumbling blocks. It has turned around nicely as it exited these businesses and reduced its investments in various digital chips. Nonetheless, it is still in some highly competitive segments of the chip industry, such as commoditylike discrete chips that carry lower margins than analog chips and microcontrollers from US-based peers. We anticipate strong competition from Chinese firms in these areas in the years ahead but think ST’s reliability will still give it a leg up on these upstarts.
Still, ST’s leading technologies and strong position in the automotive market are reasons to be optimistic about the future, with especially promising opportunities in silicon carbide-based power products. The automotive industry is focused on safer, greener, smarter cars, which is leading to increased electronic content per vehicle. Broad-based chipmakers like ST stand to profit from greater demand for advanced infotainment systems, battery management solutions, and sensors associated with new safety features like blind-spot detection. Broad-based microcontroller sales also appear to be a nice growth avenue.
We anticipate decent growth and profitability improvement out of ST. However, we see wider moats and even more attractive product mixes and margin profiles across several pure-play US-based analog chipmakers we cover.

What Investors Should Do With STM Stock

STM’s shares are currently cheap, as suggested by a Value Score of A.
The stock is trading with a forward 12-month Price/Sales of 1.76X compared with the industry’s 16.10X.
STM currently carries a Zacks Rank #3 (Hold), implying that existing investors should keep holding the stock while new buyers should wait for a better entry point into the stock.