STMicroelectronics has shown solid figures, boosted by its Automotive and Industry segments. The demand for its chips is still strong as customers want to replenish their inventories. The rumour about Apple replacing STMicroelectronics as a supplier made the stock price hesitate in past weeks, and the guidance has restored confidence.
Companies: STMicroelectronics NV
ST released its Q4 20 figures, which were in line with preliminary estimates for revenue, and consistently above estimates for the profitability figures as these were fuelled by strong demand in almost every product category (except for RF Communications). Q1 20 guidance is above consensus, while the most promising figures are at the capex level, which were well above the street.
ST held the fourth presentation of its 2020 CMD focusing on its strategic update. Overall, the predominant feeling was somewhat of deception as the revenue guidance suffered from US/China trade tensions beyond previous estimates, amongst the negative market evolution. This will put pressure on margins for the next three years. Nonetheless, we maintain a positive opinion in the longer run as we believe the company could overcome this challenge organically through strategic adaptations or M&As.
STM’s Q3 results were roughly in line with estimates, with a marginal disappointment for the bottom line. Nothing exciting at this stage, apart from the better outlook for Q4 which may exert upwards pressure on the consensus. We maintain our positive view on the stock.
Jean Marc Cherry, STMicroelectronics’ CEO, spoke at Citi’s 2020 Global Technology Virtual Conference today (09/09/2020). Overall, the message provided by the CEO was very reassuring, with STM reconfirming each of its financial targets for FY20 as well as mid-term objectives. In addition, the company is seeing improving signs in both the automotive and industrial end markets.
STM published a sound set of results for Q2, ahead of both guidance and estimates. Most importantly, the company provided strong Q3 guidance and revised upwards its FY20 guidance on the back of customer engagements and improved market conditions in Auto and Industry, as well as the build-up ahead of 5G-ready smartphone launches in H2. We maintain our positive view on the stock and we have raised our estimates by c. +11%.
STM revenue came in c. 5% below the mid-point of guidance, suffering from early COVID-19 impacts, but the AMS segment helped offset this. Q2 will be the most challenging quarter, but the company maintained its FY objective, having secured already a significant share of its H2 growth.
STM released another strong quarter, with every metric above guidance and expectation for this Q4, the best surprise for us coming at the profitability level. Going forward, STM expects to return to solid growth in 2020, although the next three months should be decisive in confirming this trend. We shall be upgrading our forecasts and see many catalysts for the stock in 2020.
STM’s Q3 publication was reassuring, in line or slightly above expectations for the Q3 numbers, while STM was a bit more bullish for Q4. As a result, AMS has been the main growth contributor while Automotive’s recovery turned to be weaker. However, the company managed to protect is profitability well and guided to above consensus for Q4 19.
STM has reported solid figures during Q2 and growth is expected to accelerate over the second half of the year. Despite this, the company has trimmed its revenue guidance by 1.3% on the back of a softer than expected recovery. However, we continue to recommend STM as we believe the company is suited for long-term growth while offering a discount compared to its peers.
STM presented its CMD, the occasion for the company to share its strong confidence in its ability to fulfill all its guidance for 2019. As expected, this performance will be achieved thanks to good developments in Automotive, Industry, and new platform launches in Smartphone. The main surprise has been the ambitious mid-term targets which have been provided. STM is on its way to transforming a wobbly situation in 2015 to a much brighter financial performance.
STM missed the lowest top-line estimates but managed to protect its profitability. The key message of this presentation has been management’s view regarding the expected recovery in Q2 as well as the growth acceleration in H2.
STM delivered a solid performance over Q4, in which we witnessed an expansion of profitability and cash flow from operations. We see a little disappointment in the outlook as the company’s guidance for Q1 19 was worse than expected. However, the analysts conference call that followed gave a very bullish view for the year to come.
STM published its Q3 revenue which was globally in line with consensus, however, the market paid no attention to it.
Q3 revenues were up 18.1% yoy to $2.52bn (above consensus), representing sequential growth of +11.2% qoq, mainly driven by strong growth in Imaging, Power Discrete and Automotive products. Year-on-year sales to OEMs and Distribution were up +21.6% and +11.2%, respectively.
The gross margin has slightly lowered to 39.8%, below the 40% midpoint guidance, mainly due to the product
STM reported its Q2 results, with key figures broadly in line with consensus expectations and in line with the group’s guidance. Revenues grew by 18% yoy while the operating profit jumped by 60% yoy. The group’s performance was driven by each activity but more specifically by Microcontrollers and Digital ICs. For Q3, the group expects revenues to grow by 10% sequentially vs 2.2% between Q1 and Q2 while the gross margin is still expected to be close to 40%.
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