STMicroelectronics: commentaires de brokers

Comme je l’ai souligné hier, les résultats de STMicroelectronics n’étaient pas très bons. Les commentaires publiés aujourd’hui par de nombreux brokers pointent du doigt les contre-performances de la JV 50-50 ST-Ericsson, qui perd beaucoup d’argent et représente un véritable boulet pour le fabricant de semi-conducteurs.

Exane BNP Paribas (« underperform », objectif 5,5$-publié le 24/1)

« Q1 guidance as expected but with a better EUR/USD and a catastrophic STE
The group says bookings are bottoming and that billing should bottom in Q1 12. Revenues are expected to be down 4–10% but we estimate that the core business decline at only 3% q/q, which is better than normal seasonality whereas STE’s revenues could decline by 34% q/q. The guidance assumes a EUR/USD of 1.32.
STE: more restructuring/impairment charges to come
STE expects a significant drop in revenues blaming inventories, the end of legacy business and a temporary halt in the ramp-up of a new platform at one client. We do not see how STE can return to breakeven with the current cost base. We expect another round of restructuring and potentially some impairment for STM.
Big consensus EPS cuts ahead – The bottom has been reached but massive structural challenges ahead
We expect FY12 consensus EPS to be cut to close to zero (from USD0.44, IBES). We would advise staying away from STM, despite the fact we are at the bottom, as STE’s woes will continue to be a drag on the stock. »

Société Générale (« achat », objectif 8$)

« ST-Ericsson suscite toujours des inquiétudes. Alors que le T4 11 était globalement en ligne (CA de 409 M$ vs 412 M$ au T3 11 sans renouvellement des revenus liés à la propriété intellectuelle et perte d’EBIT de 207 M€ vs perte de 194 M$ au T3 11, SGe : 181 M$), les commentaires sur les perspectives de ST-Ericsson sont peu enthousiastes. L’entité devrait enregistrer un repli significatif des ventes au T1 12. Si l’effet de saisonnalité et la baisse des ventes de produits historiques étaient attendus, les stocks des clients et un repli passager des ventes de nouveaux produits ont déçu. Toutefois, compte tenu des craintes généralisées sur ST-Ericsson, nous ne pensons pas que ces données aient choqué les marchés. STM indique qu’il table sur de nouvelles mesures de restructuration et de dépréciations pour ST-Ericsson afin d’accélérer le redressement et d’abaisser le seuil de rentabilité. Selon nous, de nouvelles mesures pour ST-Ericsson seraient bien accueillies. « 

Barclays Capital (« equal-weight », objectif 4,8 euros)

« STMicro reported a weak set of results, punctuated by the worsening troubles at the wireless JV ST-Ericsson. The core operations are bottoming, as we see with peers, but STEricsson is a material drag on financials and so our estimates decline further. With the wireless problems expected to continue through 2012, we struggle to become more constructive on STMicro even as the rest of the business begins to improve. We maintain our 2-Equal Weight rating and lower our price target to EUR4.8. »

JPMorgan (« neutral », objectif 6,5 euros)

« Better than seasonal 1Q12 guidance masked by ST-Ericsson issues: STMicro’s 7% QoQ decline in 1Q12 at the midpoint is broadly in line with seasonality however in reality masks the much improving wholly owned business. Though explicit guidance has not been given we believe ST-E’s revenue could decline by ~30% QoQ in 1Q12. If that assumption is correct, the wholly owned business is only declining 1.7% QoQ, much better than 5.3% decline which is seasonal. Thus despite the earnings rebound likely to occur in that business, we think ST-Ericsson is negating that recovery.
STMicro seems to be indicating much more extensive changes at STEricsson but given extent of revenue decline turning it around is going to be extremely difficult: If, as we are now forecasting, ST-Ericsson’s revenue does decline by 30% in 1Q12 the revenue level will be so low that the extensive organization at ST-E cannot be supported. Thus shareholder STMicro seems to be indicating much more extensive changes. Changes could include new JV partners, reduction of R&D centers, possible strategic actions in connectivity, potential stoppage of all G&A in the JV with that being handled by the parents etc. What exactly will be done will be known only in March/April but given that quarterly revenue will be below $300m in 1Q12 and the break-even point is over $700m per their previous indications, we believe it will require Nokia to succeed in smartphones and Nokia to use mainly ST-E in smartphones to make the math work. That is a considerable leap of faith the market will in our view be unable to currently make. « 

Kepler (« Reduce », objectif 5,5$)

« Management delivered a mixed message during yesterday’s analyst meeting. While billings could bottom in Q1, the visibility for the coming quarters remains limited due uncertain macro conditions and extremely poor outlook at ST-Ericsson. The shares could remain under-pressure in coming weeks. First, ST-Ericsson’s outlook is getting increasingly tough as demand from Nokia (its largest client representing about 40% of sales) collapses rapidly. Sales could drop more than 30% sequentially in Q1 (-26% YOY) due to seasonality, legacy products drop and overall short-fall of demand at Nokia, while operating losses should further widened to USD280m. Moving ahead, the recovery in the following quarters could be relatively slow as Nokia’s depressed demand could limit the ramp-up of the new U8500 smartphones platform. Sales could then decline 18% in 2012 with operating losses further growing to USD900m (vs. USD813m in 2011) with limited impact of cost-cutting (the USD120m savings look shy and should only be fully visible  by year-end). Secondly, new CEO Lamouche has already reviewed the products portfolio (keeping focus on application processors, modems, platforms and connectivity), will reshape the organisation by March and should launch its actions plan just after. With USD800m net debt position by year-end, ST and Ericsson should be pushed to put in place additional financing in coming months. »

UBS (« neutral », objectif 5,25 euros)

« Outlook improving (core) …
Given the ISM data and recent upbeat commentary from analog peers, it was unsurprising that STMicro cited bottoming core billings and guided to Q1 rev to be -7% q/q (at mid-point) with core rev implied -3% q/q, better than seasonally typical (consistent with Texas Instruments’ – 2%). The ISM data, which improved in Dec., continues to suggest a better outlook than feared a.nd we increase our industrial/autos forecasts.
…but challenges (wireless) remain 
STMicro’s recovery is tarnished by ongoing issues with ST-Ericsson which management cited would continue to be problematic through 2012. Despite new products accounting for a larger portion of revenue (2/3s in Q4), EBIT losses are likely to see further capital requirements from its parents and weaker Symbian orders are weighing on Q1. While management ruled out shrinking the business, it did leave the door open to partnerships in areas such as apps processing.
Raising forecasts slightly 
We make minor changes to our forecasts with slightly better core business performance being offset by ST-Ericsson. The March review of this business is now critical for STMicro to maintain its share price momentum in 2012 given we believe it is valued at US$-1bn within STMicro (.US$-2bn for all of ST-Ericsson).
Valuation – raise price target to €5.25
We have increased our price target to €5.25 from €4.80 (DCF-based, WACC 9%, g 2%) based on the better core performance. We prefer other names in the sector which will benefit from the semis cycle without STMicro’s wireless millstone. »

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