The analyst writes ST is in the middle of a transition from manufacturing a broad array of sensors, mainly for the ICE portion of the automotive market, to expanding its exposure to the electrification theme while developing a software/services business. 

Such transitions are more commonly conducted in private markets, and ST's execution as a public company makes it challenging for the stock to work, Stein notes.

Management cited the scaling and mix of the electrification business as a main headwind to margins, with new products expected to become accretive over three years, the analyst adds. 

The company announced a cost saving initiative to realign with weaker than expected demand in the near term. 

ST noted reduced charging-related orders in the past quarter as charging networks prepared to adopt North American Charging Standard. 

Based on the above, the analyst lowered the FY24 EPS estimate to $3.90 from $3.96. 

Despite the challenges, ST has established medium-term goals of 8% revenue CAGR and 16.5% EPS CAGR. These land CY26 targets at $5.15 billion sales and $5.90 EPS and include an expectation that OPM expands from 19.4% in the last qtr to 21%-23%. 

Price Action: ST shares are trading lower by 2.54% to $36.87 on the last check Thursday.