STMicro: ugly but management says 1Q25 is the bottom. Restructuring has to start, inventories are horrendous.

Let’s wait 1 more quarter.

• Very poor 1Q25, operating profit close to zero. 2Q a bit better with lower revenue decline, but OP still close to zero.

• Management claims 1Q is the bottom for revenues, its possible, but 2 large risks: restructuring costs and very high inventories.

• Consensus expects a slow and reasonable recovery into 2026 and the stock looks cheap at 11x 2026 EPS. However, given the firm’s track record and the risks mentioned, lets wait 1 more quarter.