STMicroelectronics stock price target lowered to $25 at TD Cowen

Investing.com - TD Cowen reduced its price target on STMicroelectronics (NYSE:STM) to $25.00 from $27.00 on Friday, while maintaining a Hold rating on the semiconductor manufacturer’s stock. According to InvestingPro data, STM, currently valued at $22.53B, appears undervalued based on its Fair Value analysis, despite trading at a P/E ratio of 42.29.

The firm cited concerns about STMicroelectronics’ fourth-quarter 2025 revenue guidance, which fell short of expectations despite a gross margin beat. The company guided for 3% quarter-over-quarter growth, below the mid-single-digit percentage growth analysts had anticipated. This guidance follows a significant revenue decline of 23.07% over the last twelve months, though the company maintains strong financial health with a current ratio of 2.74.

TD Cowen noted that gross margin improvements in the fourth quarter of 2025 would be followed by another margin decline in the first quarter of 2026, even as industry fundamentals slowly improve. The firm identified multiple margin headwinds, including capacity reservation fees, weighing on the company’s financial performance.

The research firm compared STMicroelectronics’ situation to Texas Instruments, which reported earlier in the week, suggesting gross margin percentage remains a sticking point for investors. TD Cowen expressed particular concern about the projected first-quarter 2026 margin step-down.

With the gradual recovery pace and ongoing inventory digestion keeping gross margins below 40%, TD Cowen concluded that STMicroelectronics’ historical earnings per share levels remain out of reach in the near term. Despite these challenges, InvestingPro analysis reveals the company has maintained dividend payments for 27 consecutive years, demonstrating long-term financial stability. For deeper insights into STM’s financial health and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, STMicroelectronics reported its Q3 2025 earnings, delivering an earnings per share (EPS) of $0.29. This figure exceeded analyst expectations of $0.23 by 26.09%. The company’s revenue reached $3.19 billion, slightly above the anticipated $3.18 billion. These results highlight a stronger-than-expected financial performance for the quarter. Despite the positive earnings and revenue figures, there were concerns among investors regarding declining gross margins and net income. Additionally, analyst firms have not provided any recent upgrades or downgrades for the company. These developments are part of the latest updates for STMicroelectronics.

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