Can STM's Partnership With Renault's Ampere Push the Stock Upward?

STMicroelectronics STM shares have plunged 48.6% on a year-to-date (YTD) basis against the Zacks  Semiconductor-General industry and the Zacks Computer & Technology sector’s return of 127.4% and 29.8%, respectively.Over the same time frame, shares of its competitors, including NVIDIA NVDA, Amtech Systems ASYS and Texas Instruments TXN, have climbed 183.2%, 35.9% and 15.7%, respectively.This underperformance stems from the deterioration in customer backlogs and order entry during the third quarter specifically in the Industrial and Auto markets. Additionally, it reflects a clear shift in customers' priorities, moving decisively from fully battery electric vehicles (EVs) to hybrids and transitioning from premium to economy models.However, in a recent move to further broaden its capabilities and offer a diverse portfolio, STMicroelectronics collaborated with Renault group’s Ampere, one of the prominent players in the EV space. Under the agreement, STMicroelectronics and Renault Group will work closely on the supply of Silicon Carbide power modules, as part of their collaboration on a powerbox for the inverter for Ampere’s ultra-efficient electric powertrain.Leveraging Ampere’s expertise in EV technology and STMicroelectronics’ expertise in advanced power electronics, the powerbox is created to have the best performance-to-size ratio for all of Ampere's electric vehicles, including 400 Volt battery electric vehicles and Segment C-EVs with 800 Volt batteries, enabling greater autonomy and faster charging.STMicroelectronics N.V. Price and Consensus STMicroelectronics N.V. price-consensus-chart | STMicroelectronics N.V. QuoteStrategic Collaborations to Aid STM’s ProspectsSTMicroelectronics’ continued efforts in long-term partnerships might help to recover the stock in the near term.The recent collaboration with Qualcomm Technologies, a subsidiary of Qualcomm Incorporated, for the next generation of industrial and consumer IoT solutions developed by edge AI, might be beneficial for the stock.This collaboration comprised the integration of Qualcomm’s AI-powered wireless connectivity technologies, starting with Wi-Fi/Bluetooth/Thread combo system-on-a-chip with the microcontroller (MCU) ecosystem from STM.Developers will enjoy seamless connectivity software integration into STM32 general-purpose MCUs, including software toolkits, facilitating faster and broader adoption via STM’s worldwide sales and distributor channels.Expansion in Industrial Market to Support STM’s GrowthThe recent introduction of EVLDRIVE101-HPD motor-drive reference design by STMicroelectronics featuring a 3-phase gate driver, STM32G0 microcontroller and 750W power stage on a circular PCB just 50mm in diameter that easily fits into drones, robots and drives for industrial equipment, such as pumps and process-automation systems, is a notable move.The latest launch of ultra-low-power STM32 MCUs that can reduce energy consumption by up to 50% is a plus for its Industrial end. It reduces the frequency of battery replacements, and the impact of discarded batteries, allowing designs to operate without batteries, using energy-harvesting systems like solar cells.STM's launch of ST Edge AI Suite, a consolidated collection of software tools uniquely created to enhance the development and deployment of embedded AI applications, is a major innovation.STM Provides Dim Q4 and FY24 GuidanceFor the fourth quarter of 2024, STM expects revenues of $3.32 billion at the midpoint, indicating a year-over-year decline of 22.4%. The Zacks Consensus Estimate is pegged at $3.32 billion, indicating a year-over-year decline of 22.5%. Gross margin is expected to be about 38% at the midpoint, impacted negatively by about 400 basis points due to the combination of product mix and sales price and higher unused capacity charges. The consensus mark for earnings is pegged at 35 cents per share, down 18.6% in the past 30 days. This indicates a year-over-year decline of 69.3%.Full-year 2024 revenues are expected to be $13.27 billion, indicating a decline of about 23.2% year over year, mainly due to lower revenues in Automotive and to a lesser extent lower revenues in Industrial, partly offset by slightly better revenues in Personal Electronics. The consensus mark for revenues is pinned at $13.27 billion.The consensus mark for earnings is pegged at $1.65 per share, down by a penny over the past 60 days, indicating a fall of 63% year over year.The gross margin is expected to be about 39.4%, negatively impacted by approximately 290 basis points due to unused capacity charges.Notably, STMicroelectronics has earlier stated that it anticipates a delayed recovery in the Industrial end market and a lower-than-expected increase in Automotive end market revenues in the second half of the year versus the first half.What Investors Should Do With STM StockSTMicroelectronics’ innovative product launches and increasing efforts to stand out in the market through meaningful agreements highlight its resilience and long-term growth potential. However, near-term challenges, including macroeconomic uncertainties and inventory digestion processes, pose a risk. Although STM’s strong fundamentals and cheap valuation, suggested by the Zacks Value Score of A, make it a compelling investment choice, the stock may not be an immediate buy considering near-term challenges.STM currently carries a Zacks Rank #3 (Hold), implying that existing investors should keep holding the stock while new buyers should wait for a better entry point into the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Texas Instruments Incorporated (TXN): Free Stock Analysis Report STMicroelectronics N.V. (STM): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Amtech Systems, Inc. (ASYS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks