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STMicroelectronics Stock Gains On Q2 Earnings Beat, Robust Q3 Guidance

STMicroelectronics Stock Gains On Q2 Earnings Beat, Robust Q3 Guidance
  • STMicroelectronics NV (NYSE: STMreported second-quarter FY21 revenue growth of 43.4% year-on-year to $2.99 billion, beating the analyst consensus of $2.89 billion.
  • The company recorded higher net sales in all product groups except the RF Communications sub-group. 
  • Sales to OEMs increased 38.4%, Distribution sales improved 53.1% Y/Y.
  • Automotive and Discrete Group (ADG) revenue rose 48% Y/Y to $1.08 billion. The segment operating margin jumped 720 bps to 9.5%. 
  • Analog, MEMS, and Sensors Group (AMS) revenue increased 62.3% Y/Y to $1.01 billion. The segment operating margin improved 960 bps to 18.6%.
  • Microcontrollers and Digital ICs Group (MDG) revenue grew 22.4% Y/Y to $897 million. The segment operating margin increased 700 bps to 22.9%.
  • The gross margin expanded 550 bps to 40.5%. Lower unloading charges, manufacturing efficiencies, favorable pricing, and improved product mix drove the margins partially offset by adverse currency effects, net of hedging.
  • The operating margin expanded by 1,120 bps to 16.3%.
  • EPS of $0.44 beat the analyst consensus of $0.37.
  • STMicroelectronics generated $602 million in operating cash flow and held $4.25 billion in cash and equivalents.
  • The company paid cash dividends of $52 million and bought back shares worth $156 million, completing its $750 million share repurchase program launched on Nov. 5, 2018.
  • On Jul. 1, it launched a new share buy-back program of up to $1.04 billion to be executed within three years. 
  • Outlook: STMicroelectronics sees Q3 mid-point revenue of $3.2 billion, above the analyst consensus of $3.08 billion, and expects a gross margin of 41%.
  • For FY21, It expects revenues of $12.4 billion to $12.6 billion.
  • Analyst Rating: Last week, Goldman Sachs analyst Alexander Duval upgraded STMicroelectronics to Neutral from Sell with a €34 price target.
  • Price Action: STM shares traded higher by 6.0% at $41.69 in the premarket session on the last check Thursday.

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