Jefferies Upgrades STMicroelectronics to Buy, Citing H2 2025 Growth Rebound

Jefferies, a leading global investment bank, has upgraded STMicroelectronics (STM) to a 'Buy' rating, citing an expected acceleration in revenue growth in the second half of 2025. The price objective for the stock has been raised from €23 to €34 ($24 to $35). The upgrade reflects better growth opportunities as the semiconductor sector recovers from an inventory correction cycle, which had earlier presented difficulties for STM.

The inventory adjustment impacting the industrial and automotive industries had previously posed challenges for STM. However, the company is expected to see a comeback in the second quarter and a more significant increase in the latter part of the year, signaling the end of this cycle. This improvement in inventory levels should contribute to STM's revenue growth in the second half of 2025.

Jefferies also expects Apple's (AAPL) future iPhone 17 to use a meta-optics-based 3D sensor solution for Face ID, which will allow STM to gain more content in this device. The novel method enables downsizing and better integration by removing conventional refractive lens components, potentially helping STM by around $3 per unit. This increased demand from Apple should contribute to STM's revenue growth in the coming years.