STMicro Raises 3Q and FY Guidance on Improved Market Conditions

(Bloomberg) — STMicroelectronics NV, the chipmaker that supplies Apple Inc. and Tesla Inc., raised both its third quarter and full year revenue forecasts as it sees “improved market conditions” through the end of the year.

The company said third-quarter revenue will be $2.45 billion with a gross margin of 36%. The average estimate was $2.26 billion and 35.36% respectively, according to data compiled by Bloomberg.

STMicro raised its full year net revenue target to between $9.25 billion and $9.65 billion, from $8.8 billion to $9.5 billion. Growth in the second half of the year would be in the range of $610 million to $1.01 billion, it said.

Key Takeaways

“We expect this growth to be driven by engaged customer programs, new products and improved market conditions,” STMicro Chief Executive Officer Jean-Marc Chery said of third-quarter estimates in a statement.The company reported second-quarter revenue of $2.1 billion with a gross margin of 35%. In April it forecast net revenue for the second quarter of $2.0 billion at mid-point, down from $2.23 billion in the first quarter.Revenue compares with average analyst estimates of $2 billion and gross margin of 34.65%.

Know More

Roughly two thirds of STMicro’s revenue relates either to the auto or smartphone end-markets, both areas with potential downside risks.Texas Instruments Inc. projected revenue in the current quarter that topped analysts’ estimates, saying orders haven’t fallen off as much in the coronavirus pandemic as they did in the last recession. Dutch chip equipment firm ASML beat analysts expectations for the third quarter and insisted 2020 will be a “growth year.”Analog Devices Inc. is close to an all-stock agreement to acquire Maxim Integrated Products Inc., according to people familiar with the matter. The deal would value Maxim at more than its current market capitalization of roughly $17 billion.STMicro’s share price underperformed from analog peers. Credit Suisse and Liberum wrote that concerns around its Huawei Technologies Co. exposure is partly responsible for this. “We believe these concerns are overdone, providing a buying opportunity,” Liberum wrote in a note on July 10.

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