Analyst Janardan Menon upgrades semiconductor maker shares to buy, citing expected earnings turnaround and boost from Apple.
While the first quarter of this year may be challenging for STMicroelectronics, Jefferies analyst Janardan Menon sees brighter days ahead for the struggling technology stock. Menon upgraded shares of the semiconductor maker to buy from hold, raising his price target by 11 euros to 34 euros.
Menon believes that the first quarter of 2025 represents the bottom of the correction cycle for STMicroelectronics' revenue and gross margin, anticipating a small improvement in the second quarter followed by a stronger rebound in the second half of 2025. He highlights that the firm has maintained an underperform or hold rating on STMicroelectronics for approximately three years, with earnings per share forecasts consistently at least 30% below consensus due to inventory corrections within the industrial and automotive sectors.However, Menon now forecasts 2025 per-share earnings in line with Wall Street consensus, marking a significant turnaround. His 2026 expectation is even 22% above the average among peers. This anticipated earnings improvement stems from a post-correction normalization of inventory and recovery within the industrial sectors. Additionally, Menon anticipates a boost from Apple between 2025 and 2027 as the iPhone 17 is expected to utilize a 3-D sensor based on meta-optics — a technology offered by STMicroelectronics — for facial recognition. Revenue related to microcontroller units and other products is also projected to recover for various reasons. With this upgrade, Menon stands as a minority on Wall Street, as most analysts with ratings on U.S.-listed shares maintain a hold or equivalent stance. Nonetheless, U.S.-listed shares of the stock surged 3.8% in Wednesday's premarket following the upgrade. The stock has declined by more than 2% in 2025, building on last year's plunge of just over 50%
SEMICONDUCTORS Stmicroelectronics JEFFERIES ANALYST UPGRADE EARNINGS TURNAROUND
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