While the stock has closed the year-to-date performance gap with the wider semiconductor group with a strong recent move, STMicroelectronics (STM) (“STMicro”) has been a bit frustrating for me, as a lot of the Street stays firmly in the “show me” camp with respect to the company’s growth and margin initiatives. I certainly understand some of the skepticism given past challenges, but I can also point to a host of other chip companies where the Street is much more willing, if not enthusiastic, to support the “it’s different this time” story.
That whinging aside, I like what I heard at the company’s recent “mini-Capital Markets Day”. I believe the company has a strong tailwind in its MCU business, and while a lot of attention has been given to the company’s leverage to auto electrification and ADAS and smartphone wins, I believe the MCU business is an overlooked growth and margin opportunity. I’m still expecting STMicro to generate mid-single-digit long-term revenue growth and double-digit FCF growth, with the company benefiting from an enhanced product mix (good for margins), improved scale, and growth opportunities in auto, industrial, and communication markets.
Read more here:
MCUs Can Be Unsung Heroes For STMicroelectronics's Long-Term Growth Story
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