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

Shareholders might have noticed that STMicroelectronics N.V. (EPA:STMPA) filed its third-quarter result this time last week. The early response was not positive, with shares down 5.1% to €24.85 in the past week. It looks like a credible result overall - although revenues of US$3.3b were in line with what the analysts predicted, STMicroelectronics surprised by delivering a statutory profit of US$0.37 per share, a notable 18% above expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for STMicroelectronics

Following the recent earnings report, the consensus from 17 analysts covering STMicroelectronics is for revenues of US$13.5b in 2025. This implies a measurable 4.8% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to plummet 25% to US$1.72 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$14.6b and earnings per share (EPS) of US$2.12 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 8.1% to €32.55. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values STMicroelectronics at €48.10 per share, while the most bearish prices it at €25.05. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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 3.9% annualised decline to the end of 2025. That is a notable change from historical growth of 13% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.2% annually for the foreseeable future. It's pretty clear that STMicroelectronics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on STMicroelectronics. Long-term earnings power is much more important than next year's profits. We have forecasts for STMicroelectronics going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for STMicroelectronics that you need to be mindful of.

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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.