William Blair analyst Jed Dorsheimer has maintained their neutral stance on STM stock, giving a Hold rating yesterday.
Jed Dorsheimer has given his Hold rating due to a combination of factors influencing STMicroelectronics’ current market position. Despite the company forecasting an 8% revenue growth for the second quarter following a significant decline, this guidance still falls short of consensus expectations, although it was not as dire as anticipated, providing some relief to the stock and sector. However, the company’s margins remain under pressure, and there is uncertainty regarding the timing and extent of a margin rebound, which adds to the cautious outlook.
Additionally, after several quarters of declining guidance, STMicroelectronics believes it has reached a revenue trough, but questions about management’s visibility persist, especially with elevated channel inventory in key regions like North America and Europe. The company’s shift towards 200 mm substrates and its ongoing supply agreements indicate strategic adjustments, yet the market remains skeptical about the recovery. Furthermore, STMicroelectronics’ current trading multiples are higher than some of its peers, suggesting that while there is optimism about a potential bottom, more concrete data and improved visibility are needed before a more favorable rating can be considered.
In another report released yesterday, Bank of America Securities also maintained a Hold rating on the stock with a $25.00 price target.