STMicro: Oddo prefers STM over IFX

(CercleFinance.com) - In April 2019 global semiconductor sales were released this weekend by the WSTS (World Semiconductor Trade Statistics).
 

In smoothed data, sales reached 32.1billion dollars, above Oddo's expectations (31.7 billion dollars). However, they were down 14.6% y-o-y, after -13% in March. Oddo points out that sequentially sales fell by 0.4% compared to March 2019.

Sales volumes of all categories of semiconductors fell by 6.2% (vs. -3.9% in March); prices fell by 8.8% (vs. -9.5%), the broker said.

Oddo says that the greater-than-expected fall in memory prices since the start of the year means that the market will bottom out at a lower and later-than-expected point. However, it still believes that it will occur in Q2. Nevertheless, the broker has slightly reduced its market forecast (for all semiconductors combined), now expecting a fall of 11%, against -9%, including -2% excluding memories, Oddo says.

Oddo reinstates its preference for ASML, a history of structural domination, it also prefers STM over IFX, STM has proven its ability to protect margins. On the contrary, it says that Infineon has little potential to improve its margins and is trading at a significant valuation premium over STM. The broker believes that in the event of a “deal” between the US and China, the STMicrolectronics share will bounce back the most, Oddo says in its daily equity review.



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