STMicroelectronics N.V. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a sad week for STMicroelectronics N.V. (EPA:STMPA), who've watched their investment drop 16% to €30.72 in the week since the company reported its half-yearly result. The result was positive overall - although revenues of US$6.7b were in line with what the analysts predicted, STMicroelectronics surprised by delivering a statutory profit of US$0.92 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for STMicroelectronics

Taking into account the latest results, the 18 analysts covering STMicroelectronics provided consensus estimates of US$13.6b revenue in 2024, which would reflect an uneasy 12% decline over the past 12 months. Statutory earnings per share are forecast to nosedive 46% to US$1.67 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$14.4b and earnings per share (EPS) of US$2.10 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.

The consensus price target fell 12% to €42.64, with the weaker earnings outlook clearly leading valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic STMicroelectronics analyst has a price target of €54.82 per share, while the most pessimistic values it at €34.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 22% annualised decline to the end of 2024. That is a notable change from historical growth of 14% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.4% per year. It's pretty clear that STMicroelectronics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for STMicroelectronics. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of STMicroelectronics' future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple STMicroelectronics analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - STMicroelectronics has 2 warning signs we think you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com