STMicroelectronics N.V. Just Missed Earnings - But Analysts Have Updated Their Models
Investors in STMicroelectronics N.V. (EPA:STMPA) had a good week, as its shares rose 6.1% to close at €41.88 following the release of its third-quarter results. It was not a great result overall. While revenues of US$3.8b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 13% to hit US$0.31 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from STMicroelectronics' 16 analysts is for revenues of US$17.4b in 2027. This reflects a sizeable 27% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 347% to US$2.60. In the lead-up to this report, the analysts had been modelling revenues of US$17.2b and earnings per share (EPS) of US$2.58 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
See our latest analysis for STMicroelectronics
The consensus price target fell 5.6% to €65.08, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on STMicroelectronics, with the most bullish analyst valuing it at €82.51 and the most bearish at €44.99 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. One thing stands out from these estimates, which is that STMicroelectronics is forecast to grow faster in the future than it has in the past, with revenues expected to display 21% annualised growth until the end of 2027. If achieved, this would be a much better result than the 3.3% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. Not only are STMicroelectronics' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for STMicroelectronics going out to 2028, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with STMicroelectronics , and understanding these should be part of your investment process.
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