The upgrade may be based on various factors such as positive financial indicators, favorable market conditions, or the company's own strategic developments. Investors and analysts will likely view this upgrade as a positive signal regarding the company's outlook and prospects. It will be interesting to see how this rating change influences market sentiment and the performance of the stock in the coming days.
STMicroelectronics may have faced a challenging first quarter this year, but Jefferies analyst Janardan Menon is optimistic about the future prospects of the struggling technology stock.
Upgrade to Buy Rating
Janardan Menon has upgraded shares of the semiconductor manufacturer from hold to buy, reflecting his positive outlook on the company's performance.
Raised Price Target
As part of the upgrade, Menon has also increased the price target for STMicroelectronics by 11 euros to 34 euros, signaling his confidence in the stock's potential for growth.
Bottom of the Correction Cycle
Menon believes that the first quarter of 2025 represents the low point of the revenue and gross margin correction cycle for STM, with expectations of gradual improvement in the subsequent quarters.
Anticipated Rebound
Looking ahead, Menon foresees a modest improvement in the second quarter followed by a stronger rebound in the second half of 2025, indicating a positive trend for the company's financial performance.
Positive Outlook for Earnings
Menon's revised earnings forecasts for 2025 align with Wall Street consensus, marking a significant improvement from previous projections.
Optimism for 2026
Furthermore, Menon's earnings forecast for 2026 stands 22% above the average among industry peers, underlining his bullish outlook on the company's future earnings potential.
Factors Driving Turnaround
Menon attributes the expected earnings turnaround to post-correction normalization of inventory, recovery in industrial sectors, and anticipated revenue boost from key clients like Apple.
Market Response
Following the upgrade, U.S.-listed shares of STMicroelectronics saw a 3.8% increase in premarket trading, signaling positive investor sentiment towards the stock.
Analyst Consensus
While Menon's upgrade positions him favorably on Wall Street, most analysts covering the U.S.-listed shares of STMicroelectronics maintain a hold or equivalent rating, according to LSEG data.
Stock Performance
Despite the recent challenges, STMicroelectronics' stock price has shown resilience, with a slight decline in 2025 following a significant drop in the previous year.
