STMicroelectronics shares extend fall after Morgan Stanley downgrade
STMicroelectronics shares fell after Morgan Stanley downgraded the stock due to weaker demand in the automotive market and an inventory correction in the industrial sector. The company has lowered its revenue forecast and gross margin expectations. Morgan Stanley has also reduced its price target for STMicroelectronics. This news falls under the category of business-related information.
Investing.com – STMicroelectronics NV (NYSE:STM) (EPA:STMPA) shares extended losses on Friday after Morgan Stanley (NYSE:MS) downgraded the stock to “Equal-weight” from “Overweight”. The downgrade comes on the heels of a weaker-than-expected guidance from the semiconductor company.
Analysts flagged a deeper-than-anticipated inventory correction in the industrial sector and softer-than-expected demand in the automotive market. These factors have led to a downturn in STMicroelectronics' business, resulting in underutilization of capacity and margin erosion.
The company has lowered its full-year revenue forecast to $13.2-$13.7 billion from the previous guidance of $14-$15 billion. Gross margin is also expected to decline to around 40% from the low 40% range.
“With a deep correction in industrials and declining autos, we see fiscal year 2024 sales and earnings per share down -23% and -59% Y/Y, respectively, to $13.4 billion and $1.83 (previously $14.39 billion and $2.41), which we see as evidence of a severe cyclical trough for STMicro,” analysts said.
As a result of the revised estimates, Morgan Stanley has cut its price target for STMicroelectronics to €35 from €48.
This content was originally published on Investing.com
