St to highs since July 2024 with tech Asia and Ceo reassurances on growth

(Il Sole 24 Ore Radiocor) - In a FTSE MIB moving at an uncertain pace, Stmicroelectronics kicks into high gear with a rise of more than six points and to the highest since July 2024, on the back of the strong performance of Asian tech after Beijing outlined a five-year roadmap to push technology development and the increasing use of artificial intelligence across all sectors, starting with robotics and quantum computing.

China will 'conquer the heights of scientific and technological development' and seek 'decisive breakthroughs in key technologies', the document says, explaining that the country is already now ahead of its competitors in research and development in artificial intelligence and other key areas. "China is now a world leader in research, development and application in fields such as AI, biomedicine, robotics and quantum technology, and new breakthroughs have been made in independent chip research and development," it reads.

This, as mentioned, gave a boost to Asian technology and, by extension, also to European technology. In particular, in Milan St brings over 31% up since the beginning of the year. Pushing the shares, which are doing better than other European chip groups (in Amsterdam Asm +1.1% and Be Semiconductor +1.4%, in Frankfurt Infineon +0.9%), are also the words of St. Louis CEO Jean-Marc Chery, who, speaking in the Italian night at a conference in San Francisco, confirmed the guidance for the first quarter and anticipated better than normal seasonal growth for the coming months.

"Management has provided messages consistent with what has already been communicated during the last results conference call, i.e. with a first and second half that will show better than seasonal growth," point out Intermonte analysts, who, compared to the consensus, give more cautious estimates on revenue growth (+10.5% year-on-year to $13.04 billion, versus +12% to $13.25 billion in the consensus). While the market appreciates the company's exposure to specific growth drivers, visibility on the more cyclical component related to traditional end markets, particularly Automotive and Industrial, remains limited.

"The presentation increased confidence on higher than consensus adjusted earnings per share estimates (around 10 per cent)," Banca Akros experts point out, especially as Chery indicated that "in the automotive sector there is no excess inventory, industrial growth is very strong and, although there are headwinds due to the shortage of memory chips, there may be a turnaround with favourable winds in early 2027." Banca Akros, in light of Chery's comments, only slightly updated its estimates and confirmed its 'buy' rating and target price at EUR 35. Also for Intermonte, 'the current rating already adequately reflects the expected recovery and the lower exposure to AI-related growth'.