STMicro: share price falls, broker downgrades its recommendation

(CercleFinance.com) - STMicro lost more than 3.
5% in Paris as Morgan Stanley downgraded its recommendation on the stock from 'overweight' to 'weight in line', with a price target reduced from 48 to 35 euros.

In a research note, the financial intermediary justifies its downgrade by the further lowering of the semiconductor manufacturer's forecasts for 2024, this time attributed to excessively high inventories at industrial customers and falling demand in the automotive sector.

Capacity under-utilization continues to penalize margins, and the company estimates that it will take at least one to two quarters to resolve problems related to inventory flow channels", the analyst points out.

Overall, this trough is becoming the worst we've seen in a long time for the group", stresses MS, who underlines his concern about the lack of visibility surrounding a possible recovery in the second half of the year.

From a professional point of view, we'll have to wait for the next quarterly publications in order to be able to observe any signs of improvement in fundamentals, he warns in his note.


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