ST(US:STM) Zhi Tong Cai Jing·2025-10-17 08:35Core Viewpoint - Morgan Stanley maintains a "neutral" rating on STMicroelectronics (STM.US) with a target price of €26.40, citing uncertainty in growth expectations for fiscal year 2026 primarily due to the ongoing weakness in the automotive sector [1][2]. Group 1: Q3 Performance Expectations - STMicroelectronics is expected to report Q3 revenue of $3.17 billion, reflecting a quarter-over-quarter increase of 14.6% but a year-over-year decline of approximately 2.5%, aligning with market consensus and company guidance [1]. - The Analog, Power and Discrete (APMS) segment is projected to decline by about 9.9% year-over-year, while the Microcontrollers, Digital Integrated Circuits, and RF Products (MDRF) segment is expected to grow by approximately 9.4% year-over-year [1]. - Q3 gross margin is anticipated to be 33.5%, consistent with consensus expectations, while EBIT is projected at $202 million with an EBIT margin of 6.4% [1]. Group 2: Q4 Outlook - Market consensus expects Q4 revenue for STMicroelectronics to be $3.35 billion, representing a quarter-over-quarter increase of 5.6% and a year-over-year increase of 1.0% [2]. - Gross profit for Q4 is projected at $1.17 billion, with a quarter-over-quarter increase of 10.3% but a year-over-year decline of 6.4%, leading to an expected gross margin of 35.0% [2]. - The company anticipates growth in automotive and industrial segments in Q4, supported by improved capacity utilization and production efficiency [2]. Group 3: Long-term Concerns - Morgan Stanley expresses caution regarding STMicroelectronics' performance in 2026, highlighting persistent issues in the automotive market and high inventory levels, which may hinder capacity utilization unless a significant economic recovery occurs [3]. - The current market consensus predicts a 12.5% year-over-year sales growth for STMicroelectronics in 2026, along with a gross margin increase of 273 basis points, but Morgan Stanley considers these projections overly optimistic [2][3].