STMicroelectronics (STM, Financial) projects its gross margin for the second quarter to fluctuate by roughly 200 basis points as the company navigates a challenging economic landscape. Looking ahead, the tech manufacturer anticipates that the first quarter of 2025 will mark the low point for its performance.
In response to the current uncertainties, STMicroelectronics is emphasizing strategies within its control to bolster its competitive edge. The company is committed to innovation, concentrating on enhancing its product and technology offerings while advancing its manufacturing processes. Additionally, a major focus is on cost management.
The firm is executing a comprehensive strategy to revamp its global manufacturing footprint and adjust its cost structure. This initiative remains on schedule, with a goal of achieving significant cost reductions. By the end of 2027, the company aims to realize annual savings totaling several hundred million dollars.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for STMicroelectronics NV (STM, Financial) is $27.58 with a high estimate of $37.30 and a low estimate of $18.00. The average target implies an upside of 26.62% from the current price of $21.78. More detailed estimate data can be found on the STMicroelectronics NV (STM) Forecast page.
Based on the consensus recommendation from 13 brokerage firms, STMicroelectronics NV's (STM, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for STMicroelectronics NV (STM, Financial) in one year is $29.42, suggesting a upside of 35.08% from the current price of $21.78. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the STMicroelectronics NV (STM) Summary page.
STM Key Business Developments
Release Date: January 30, 2025
- Q4 2024 Net Revenues: $3.32 billion, decreased 22.4% year over year, increased 2.2% sequentially.
- Q4 2024 Gross Margin: 37.7%.
- Q4 2024 Operating Margin: 11.1%.
- Q4 2024 Net Income: $341 million.
- Full Year 2024 Net Revenues: $13.27 billion, decreased 23.2% from 2023.
- Full Year 2024 Gross Margin: 39.3%, down from 47.9% in 2023.
- Full Year 2024 Operating Margin: 12.6%, down from 27% in 2023.
- Full Year 2024 Net Income: $1.56 billion, decreased 63% from 2023.
- Full Year 2024 Free Cash Flow: $288 million.
- Full Year 2024 Net CapEx: $2.53 billion.
- Silicon Carbide Revenue 2024: $1.1 billion.
- Q4 2024 Earnings Per Share: $0.37.
- Full Year 2024 Net Cash from Operating Activities: $2.97 billion, decreased 50.5% from 2023.
- Inventory at Year-End 2024: $2.79 billion.
- Q1 2025 Revenue Outlook: $2.51 billion, plus/minus 350 basis points.
- Q1 2025 Gross Margin Outlook: 33.8%, plus/minus 200 basis points.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- STMicroelectronics NV (STM, Financial) achieved Q4 2024 financial results in line with the midpoint of their guidance, despite a challenging environment.
- The company reported strong momentum in the Chinese market for silicon carbide products, with more engagements with top Chinese carmakers than any other suppliers.
- STMicroelectronics NV (STM) introduced a new strategic collaboration with Qualcomm Technologies for the next generation of industrial and consumer IoT solutions.
- The company is on track to be carbon-neutral by 2027 and has made significant progress towards its 100% renewable energy goal.
- STMicroelectronics NV (STM) announced the construction of a new high-volume silicon carbide manufacturing facility in Catania, Italy, to enhance its manufacturing capabilities.
Negative Points
- Q4 2024 net revenues decreased by 22.4% year over year, with a significant decline in the Industrial and Automotive segments.
- The company's gross margin decreased to 37.7% in Q4 2024, down from 47.9% in the previous year, due to unfavorable product mix and higher unused capacity charges.
- STMicroelectronics NV (STM) faced a slowdown in the Automotive sector, particularly in Europe, with a book-to-bill ratio below 1.
- The company experienced a 63% decrease in net income for the full year 2024, reflecting a challenging market environment.
- STMicroelectronics NV (STM) had to postpone its $20 billion-plus revenue ambition plan to 2030 due to weaker demand and higher inventory levels.
