STMicroelectronics Reports Blowout Quarter, Updates Guidance

Shares of STMicroelectronics (STM), a global manufacturer of semiconductor products, closed 6% higher on Thursday after reporting better-than-expected Q2 results, increasing investors’ optimism.

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The company reported Q2 earnings per share of $0.44, which more than quadrupled year-over-year and beat analysts’ expectations of $0.37 per share.

Net revenues of $2.99 billion also surpassed the consensus estimate of $2.89 billion, increasing 43.4% year-over-year.

The Automotive and Discrete Group recorded a 48.2% year-over-year rise in revenue, while the Analog, MEMS, and Sensors Group’s revenue jumped 62.3%. Additionally, revenue from the Microcontrollers and Digital ICs Group surged 22.3%. (See STMicroelectronics stock charts on TipRanks)

For Q3 2021, the company projects net revenues to be around $3.20 billion, up 7% on a sequential basis (+/-350 basis points).

STMicroelectronics CEO commented, “We will now drive the Company based on a plan for FY21 revenues of $12.5 billion, plus or minus $100 million, a year-over-year increase of 22.3% at the mid-point. This growth is expected to be driven by strong dynamics in all the end markets we address and our engaged customer programs. Our CAPEX plan will now be about $2.1 billion for 2021.”

Following the Q2 results, Robert W. Baird analyst Tristan Gerra reiterated a Hold rating and a price target of $45 (7.9% upside potential) on the stock.

Gerra said, “The revenue outlook increase is driven by both volume and pricing.”

The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 4 Buys and 3 Holds.

Overall, the average STMicroelectronics price target of $47.65 implies 14.2% upside potential to current levels. Shares have increased 47.4% over the past year.

STMicroelectronics scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.