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STMicroelectronics NV ADR - Stock Quote STM

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Morningstar's STMicroelectronics NV ADR Stock Analysis

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STMicro Outlines Very Ambitious Financial Targets for Next Three to Five Years; FVEs of $53, EUR 51

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

Narrow-moat STMicroelectronics', or ST's, 2022 capital markets day stunned us, as the firm outlined bold "ambitions" for its 2025-2027 financial performance that were well above the tail end of our prior five-year projections. We raise our fair value estimate to $53 from $47 (to EUR 51 from EUR 45) as we are a bit more optimistic about gross margin expansion as the firm provided more details into its product mix and manufacturing expansion plans, which we think are sustainable. In turn, we think there is an attractive margin of safety for investors today. However, our model assumes ST will reach its revenue ambition in 2027 but will fail to hit any of its profitability metrics even five years from now. We think ST would have to fire on all cylinders for the next three to five years with no bouts of macroeconomic headwinds or cyclical downturns to reach its targets, and we view significant upside to ST's shares if it can in fact deliver on its ambitions by 2025.

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STMicroelectronics NV ADR's Company Profile

Business Description

A merger between Italian firm SGS Microelettronica and the nonmilitary business of Thomson Semiconductors in France formed STMicroelectronics in 1987. STMicro is a leader in a variety of semiconductor products, including analog chips, discrete power semiconductors, microcontrollers, and sensors. STMicro is an especially prominent chip supplier into the industrial and automotive industries.

39, Chemin du Champ des Filles, Plan-Les-Ouates
Geneva, 1228, Switzerland
T +41 229292929
Sector Technology
Industry Semiconductors
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2021
Stock Type
Employees 48,254

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