STMicroelectronics Shares Fall After Missing Analyst Expectations
Shares of STMicroelectronics, the European chip maker, saw a decline on Thursday after the company provided guidance for the fourth quarter that fell below analysts' expectations. Additionally, the company slightly adjusted its forecasts for the year.
At 0755 GMT, STMicroelectronics shares traded 1.7% lower at EUR36.50.
Q4 Projections
STMicroelectronics is targeting a net revenue of $4.30 billion and a gross margin of 46% for the current quarter. However, Citi analysts have pointed out that these projections are lower than the Visible Alpha consensus estimates of $4.41 billion for revenue and 46.6% for the gross margin.
"Bears may argue this is just the beginning of a crack in ST's fundamentals," they said.
Challenges in the Semiconductor Market
With slowing demand for semiconductors in products such as computers and smartphones, European chip makers have been facing challenges for months. However, Jochen Hanebeck, the CEO of Germany's Infineon Technologies, stated in August that demand from the automotive market remained high.
"We believe ST is continuing to see high demand across automotive and industrial verticals, as per comments from peers," Citi analysts said.
Q3 Performance
STMicroelectronics reported a net revenue of $4.43 billion for the third quarter, marking a 2.5% increase compared to the previous year. The company's automotive business contributed $2.03 billion, although sales in its personal electronics segment fell by 28% to $990 million.
However, overall revenue exceeded the Visible Alpha consensus of $4.38 billion, according to Citi analysts.
Revised Forecasts
STMicroelectronics is now forecasting a net revenue of approximately $17.3 billion for the year, with a gross margin of about 48.1%. This is slightly lower than their previous guidance of net revenue totaling $17.4 billion, give or take $150 million, and a gross margin exceeding 48%.
