Jefferies upgrades this beaten-down chip stock, says earnings are poised to rebound​on February 19, 2025 at 10:45 am

The firm upgraded its rating to buy from hold.The firm upgraded its rating to buy from hold.   While the first quarter of this year may be rough for STMicroelectronics , Jefferies sees better days on the horizon for the struggling technology stock. Analyst Janardan Menon upgraded shares of the semiconductor maker to buy from hold. He also raised his price target by 11 euros to 34 euros. “We believe Q1-25 represents the bottom of this correction cycle for STM’s revenue and gross margin,” Menon wrote to clients in a Wednesday note. He expects “a small improvement in Q2 followed by stronger rebound in H2-25.” Menon pointed out that the firm has been at an underperform or hold rating for about three years on STMicroelectronics. Its earnings per share forecasts have been at least 30% under consensus given impacts from an inventory correction within the industrial and automotive sectors. Now, the analyst has a forecast for 2025 per-share earnings that’s in line with Wall Street consensus, which would mark a major turnaround. What’s more, his 2026 expectation is 22% above the average among peers. A post-correction normalization of inventory and recovery within the industrial sectors are two reasons to expect this turnaround in earnings, Menon said. He also anticipates a boost from Apple between 2025 and 2027 as the iPhone 17 uses a 3-D sensor that’s based on meta-optics — a technology STMicroelectronics offers — for facial recognition. Revenue tied to microcontroller units and other products can see a recovery for various reasons, he added. STM 1Y mountain STM, 1-year With his upgrade, Menon moved into the minority on Wall Street. Most analysts with ratings on U.S.-listed shares are at a hold or equivalent, per LSEG. U.S.-listed shares of the stock jumped 3.8% in Wednesday’s premarket following the upgrade. The stock has slipped more than 2% in 2025, building on last year’s plunge of just over 50%.