While he says he is “extremely optimistic” about the outlook for the chip sector, the US broker points out that European semiconductor manufacturers have outperformed the stock market by 399% over the period 2016-2021.
Jefferies, who attributes this performance to the growing use of chips in a range of applications, however believes that the sector has now entered a phase of deceleration after peaking in June 2021.
“An inventory correction is looming, in our view, which should lead to an even sharper slowdown and a downward revision of market expectations,” he warns.
In this context, the broker is starting to cover ST with an ‘underperformance’ opinion and a target price of 30 euros.
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