Stock of the Day

June 17, 2020

STMicroelectronics (STM)

$27.58
-$0.65 (-2.3%)
Market Cap: $25.49B

About STMicroelectronics

STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and sells semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The Automotive and Discrete Group segment offers automotive integrated circuits (ICs), and discrete and power transistor products. The Analog, MEMS and Sensors Group segment provides industrial application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs); general purpose analog products; custom analog ICs; wireless charging solutions; galvanic isolated gate drivers; low and high voltage amplifiers, comparators, and current-sense amplifiers; MasterGaN, a solution that integrates a silicon driver and GaN power transistors in a single package; wireline and wireless connectivity ICs; touch screen controllers; micro-electro-mechanical systems (MEMS) products, including sensors or actuators; and optical sensing solutions. The Microcontrollers and Digital ICs Group segment offers general purpose and secure microcontrollers; and radio frequency (RF) products. It also offers application-specific standard products for analog, digital and mixed-signal applications. In addition, the company provides assembly and other services. It sells its products through distributors and retailers, as well as through sales representatives. The company serves automotive, industrial, personal electronics and communications equipment, and computers and peripherals markets. STMicroelectronics N.V. was incorporated in 1987 and is headquartered in Geneva, Switzerland.

STMicroelectronics Bull Case

Here are some ways that investors could benefit from investing in STMicroelectronics:

  • Current stock price is $22.36, which may present a buying opportunity for investors looking for undervalued stocks in the semiconductor sector.
  • The company reported earnings per share (EPS) of $0.37, exceeding analysts' expectations of $0.35, indicating strong financial performance and potential for growth.
  • STMicroelectronics has a solid market capitalization of approximately $20.20 billion, which reflects its stability and presence in the semiconductor industry.
  • The firm has a low debt-to-equity ratio of 0.11, suggesting that it is not heavily reliant on debt for financing, which can be a sign of financial health and lower risk for investors.
  • With a consensus rating of "Hold" and an average target price of $33.40, analysts see potential for price appreciation, making it an attractive option for investors looking for growth.

STMicroelectronics Bear Case

Investors should be bearish about investing in STMicroelectronics for these reasons:

  • Recent downgrades from multiple analysts, including Barclays and TD Cowen, indicate a lack of confidence in the stock's short-term performance.
  • The stock has experienced significant volatility, with a 52-week high of $49.05 and a low of $21.36, which may deter risk-averse investors.
  • Analysts have cut earnings estimates for upcoming quarters, with Q2 2025 EPS now expected to be $0.17, down from a previous estimate of $0.25, signaling potential challenges ahead.
  • With a current P/E ratio of 13.47, the stock may not be as attractive compared to other growth stocks in the technology sector, which could limit its appeal to growth-focused investors.
  • The company has a relatively low net margin of 11.74%, which may indicate less profitability compared to its peers, raising concerns about its competitive position in the market.

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