ST skids after the accounts, profit recovery isn't enough. The outlook is disappointing.

(Il Sole 24 Ore Radiocor) - Milan, October 23 - The return to profitability after the second-quarter losses and the improvement in profit and revenue compared to the previous three months, still exceeding analysts' forecasts for the third quarter, are not enough to support STmicroelectronics shares. Initially, the stock fell nearly 6%, but has since reduced its losses but remains at the bottom of the list.

Analysts are disappointed by the forecasts for the fourth quarter and 2025: they signal an improvement compared to the first half of the year, as CEO Jean-Marc Chery also noted, but are still below consensus estimates . "ST recorded an EBIT slightly above expectations thanks to higher revenues, higher other income, and lower restructuring costs, partially offset by a lower-than-expected gross margin," say analysts at Intermonte, explaining that " guidance appears mixed , reflecting a slightly better gross margin but lower-than-expected revenues."

Specifically, for the fourth quarter, ST expects net revenues of $3.28 billion , corresponding to a 2.9% increase compared to the previous quarter, but a 1.2% decrease compared to the $3.321 billion in the fourth quarter of 2024. For 2025, ST expects revenues of $11.75 billion, a 22.4% increase in the second half compared to the first but below the $13.269 billion of 2024. Intermonte analysts for the fourth quarter expect revenues of $3.386 billion, while the consensus is for $3.35 billion. For the full year 2025, Intermonte analysts expect revenues of $11.839 billion (-11% compared to 2024) and the consensus is $11.771 billion. Gross margin is expected to be around 35% in the fourth quarter and around 33.8% in 2025, both in line with market forecasts.

Looking at the results, the semiconductor group reported a net profit of $237 million in the third quarter, down 32.3% from the same period last year, but a significant recovery from the net loss of $97 million in the previous three months. Revenue fell 2% year over year (up 15.2% quarter over quarter) to $3.187 billion, compared to the company's midpoint estimate of $3.17 billion at the end of the second quarter. Analysts' consensus had been for a profit of $191 million on revenues of $3.174 billion. "Revenues were slightly above the midpoint of our business guidance, with higher revenues from Personal Electronics, while Automotive and Industrial results met forecasts, and those from CECP (Communication Equipment and Computer Peripherals) were essentially in line with expectations," said CEO Jean-Marc Chery.