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Investing.com -- STMicroelectronics NV (EPA:STMPA) shares fell nearly 2% in Paris trading Wednesday after a Bernstein analyst downgraded the stock to Market Perform from Outperform.
The revision comes after the semiconductor contract manufacturer opted not to provide formal guidance for 2025, “leaving investors with a challenging view for the year ahead with no clear bottom in sight,” analyst Sara Russo said in a Wednesday note.
By contrast, STMicroelectronics’ peer Infineon (OTC:IFNNY) Technologies (ETR:IFXGn) slightly lifted its guidance for the fiscal 2025 year (FY25), citing foreign exchange (FX) market tailwinds.
STMicroelectronics reported that its full-year revenues were 23% lower than in 2023, with personal electronics being the only segment to outperform expectations. Both industrial and automotive sectors continued to show cyclical weakness, with the automotive segment experiencing a further decline in the fourth quarter, leading to lowered expectations for 2025.
The first-quarter guidance was also disappointing, with projected revenues of $2.5 billion, below the consensus estimate of $2.7 billion, and a gross margin of 33.8%, also under the consensus of 35.9%.
Furthermore, the company's silicon carbide (SiC) revenues are not expected to grow, and the capital expenditure for 2025 is forecasted to be between $2 billion and $2.3 billion, down from $2.5 billion in 2024.
“No further specific guidance was given for 2025, which we believe makes it hard to have confidence in the trajectory of the year ahead—and particularly to have confidence in the medium-term guidance given at the Capital Markets Day (CMD) to reach $18B in revenue by 2027/28,” Russo continued.
In turn, the analyst has significantly cut its 2025 estimates for STMicroelectronics, coming in below the consensus and suggesting that second-half estimates may need further revision.
Although a stronger rebound is factored in for 2026 and 2027, Bernstein's projections still fall short of the market on top-line revenue and diluted earnings per share (EPS).
The firm has rolled its valuation forward to 2026 and, using a 14x price-to-earnings (P/E) ratio on its projected 2026 EPS of approximately $1.7, has lowered its target price for STMicroelectronics to €25.
“We’re less confident in the timing of a cyclical bottom for STMPA, and step to the sidelines for now,” Russo concluded.
