On Friday, BofA Securities revised its outlook on STMicroelectronics NV (NYSE:STM:FP) (NYSE: STM), downgrading the semiconductor company’s stock rating from "Buy" to "Neutral." Concurrently, the firm reduced its price target for the company’s shares from EUR 29.00 to EUR 23.00. The downgrade comes as STM trades near its 52-week low of $21.36, with the stock down approximately 48% over the past year. According to InvestingPro data, four analysts have recently revised their earnings expectations downward. BofA Securities attributed the downgrade to a reevaluation of the company’s valuation multiple in the face of a challenging market without clear catalysts for growth.
The price target adjustment reflects a change in the valuation multiple from 5.4 times to 4.5 times the company’s expected CY26E EV/EBITDA, which translates to approximately 8.2 times EV/CY26E EBIT. Currently, STM trades at an EV/EBITDA of 5.09x and a P/E ratio of 13.22x. This new multiple is at the lower end of STMicroelectronics’ historical range, which spans from 6.4 times to 18 times. BofA Securities highlighted that the lack of catalysts and difficult market conditions were significant factors in their reassessment of the stock’s future performance. For deeper insights into STM’s valuation metrics and more exclusive analysis, investors can access the comprehensive Pro Research Report available on InvestingPro.
Despite the downgrade, BofA Securities acknowledged the possibility that STMicroelectronics’ shares could see an uplift from a cyclical improvement anticipated in the second half of 2025. However, they believe that investors may opt for exposure to the sector through other means. The firm suggests that Infineon (OTC:IFNNY), which they rate as "Buy" and consider their top pick in the Automotive Semiconductors segment, could be a more attractive option for investors looking to capitalize on specific industry trends, such as AI server power management and gains in the Automotive MCUs market share.
STMicroelectronics, headquartered in Geneva, Switzerland, is a global semiconductor leader delivering solutions across the spectrum of microelectronics applications. The company’s downgrade comes at a time when the semiconductor industry is facing multiple challenges, including supply chain disruptions and fluctuating demand across different market sectors.
The revised price target of EUR 23.00, down from EUR 29.00, is equivalent to a decrease from approximately $30 to $24 in American Depositary Receipt (ADR) terms, providing a new benchmark for investors monitoring the company’s performance on the New York Stock Exchange.
In other recent news, STMicroelectronics NV is reportedly considering a workforce reduction of approximately 6% due to a slump in demand in the industrial and automotive sectors. This could impact between 2,000 and 3,000 employees, primarily in Italy and France. Meanwhile, Barclays (LON:BARC) has downgraded the chipmaker’s stock rating from Equalweight to Underweight and lowered the price target to €20.00, citing concerns about the company’s future performance. TD Cowen analysts have also revised their stance on STMicroelectronics, downgrading the stock from Buy to Hold and reducing the price target to $25 due to challenges in the semiconductor industry. On a more positive note, Bernstein maintains an Outperform rating for STMicroelectronics, highlighting potential growth drivers such as e-mobility and advanced driver-assistance systems. However, JPMorgan has downgraded the stock from Overweight to Neutral and reduced its price target from EUR35.00 to EUR30.00, citing continued challenges in the automotive sector and a more cautious outlook for the company’s high-margin Microcontroller Unit business.
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