(News Bulletin 247) – The Franco-Italian semiconductor group published results generally in line for the third quarter but its revenue forecast for the last three months of the year turns out to be too accurate. The action relapses in Paris.

If STMicroelectronics is slowly starting to see the recovery of its activity, investors remain nervous about the case of the Franco-Italian semiconductor group.

On Wednesday, the stock had already fallen 4%, penalized by poor figures from an American comparable, Texas Instrument. Previously, in July, the company reported a margin target for the third quarter that was below expectations. The stock then bit the dust (-16.6% on July 24).

“Although STMicroelectronics’ gross margin guidance for the third quarter was disappointing, revenue trends and management comments suggest that underlying demand could improve and that a recovery in demand could take hold,” HSBC then put into perspective.

Unfortunately for its shareholders, STMicroelectronics is still struggling this Thursday, October 23, after publishing its third quarter results and its outlook for the fourth. The stock fell 7.5% at the end of the morning, showing the second biggest drop in the CAC 40.

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Revenue projection disappoints

Over the period from July to the end of September, the company published generally satisfactory accounts. Revenues fell 2% year-on-year but increased 15% sequentially (quarter-on-quarter) to $3.19 billion, while gross margin stood at 33.2%, down 0.3 percentage points sequentially. Earnings per share reached 26 cents.

According to Oddo BHF, the consensus (the average forecast) of analysts was for revenues of $3.17 billion, a gross margin of 33.6% and earnings per share of 21 cents.

The company’s turnover was higher than expected “in Personal Electronics, while Automotive and the Industrial (segment) were in line with expectations and Communication Equipment and Computer Peripherals (CECP) generally in line with our expectations”, explained Jean-Marc Chéry, general manager of STMicroelectronics, quoted in a press release.

Once again, the problem lies in the forecasts. For the fourth quarter, STMicroelectronics anticipates revenues of $3.28 billion, reflecting an increase of 2.9% sequentially and a gross margin of 35%.

The revenue target for the fourth quarter was lower than expected, with consensus calling for a figure of $3.35 billion.

A recovery with uncertain form

Positive point, notes Oddo BHF: the ratio of orders taken to turnover (“book to bill”) has exceeded 1, particularly in the automobile segment.

The research firm, however, calculates that the consensus on earnings per share for 2025 should fall by 3 to 4% “which is not great”.

“The first quarter of 2025 marked the lowest point and the recovery, although slow and uncertain at the moment, is before us (because we believe that the drivers of the sector – electrification and digitalization – remain the same)”, puts Oddo BHF into perspective, which reiterates its advice to “outperform” on the stock.

Barclays is more severe. The bank notes that the “industrial” segment, which brings together the group’s products for different applications (lighting, energy distribution and generation, factory automation technologies, etc.) reached a “book-to-bill” of only 1.

Which, after previous publications from other groups in the sector, “will reinforce concerns about the shape that the recovery will take in the industrial sector, which could be a key growth engine for STMicroelectronics in 2026”, explains the British bank.

On this last point, Barclays believes that the lower-than-expected revenue forecast for the fourth quarter casts doubt on the strength of this expected recovery next year.

However, “we think that the action includes a significant recovery in 2026 and 2027, because otherwise it seems expensive,” explains the establishment.