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STMicroelectronics under pressure: Expected revenue losses, Infineon share also affected.
STMicro in reverse gear: European chip giant expects losses even at the beginning of the year, following a weak quarter.
The European semiconductor company STMicro announced its financial results on Thursday and expects a significant decline in revenue of 15 percent to $3.6 billion in the first quarter of the new fiscal year. This pessimistic outlook has also affected competitors in the industry, such as Infineon, whose shares started trading on Tradegate with a loss of 2.5 percent. STMicro is primarily active in the field of semiconductor chips for the automotive and industrial industries and has experienced a decrease in orders and overall revenue in recent months.
Group CEO Jean-Marc Chery cited a decline in orders compared to the third quarter as the main reason for the negative results in the fourth quarter. While demand remained stable in the automotive sector, there were no significant revenue increases in the consumer electronics sector and further deterioration in the industrial sector. In the fourth quarter, operating profit also declined by 20.5 percent to $1.02 billion, while revenue shrank to $4.28 billion.
Swiss major bank UBS maintains its "Buy" rating for STMicroelectronics and sets a price target of 54 Euros. However, the semiconductor manufacturer's outlook for the current year is well below the consensus estimates of experts, falling by over a third.
The analyst Francois-Xavier Bouvignies explained in an initial assessment that the new target values for the entire year 2024 indicate that market expectations for operating income will decrease by 20 to 25 percent. It is especially important to keep an eye on the company's telephone conference, in which management may seek to reassure and provide a more optimistic assessment of pricing and prospects for the automotive business.
Infineon loses value due to poor results of US chip giant Texas Instruments impacting the automotive business
Investors should closely monitor the developments at STMicro and their impact on the industry. The current sales figures and future prospects of the automotive and industrial industries will have a significant influence on the stock performance of STMicro.
