Jefferies upgraded STMicroelectronics (STM, Financials) from Hold to Buy, citing an expected acceleration in revenue growth in the second half of 2025.

Reflecting better growth opportunities as the semiconductor sector recovers from an inventory correction cycle, the price objective was raised from €23 to €34 ($24 to $35).

The company pointed out that an inventory adjustment impacting the industrial and automotive industries had earlier presented difficulties for STM. With a little comeback in the second quarter and more significant increase forecast in the latter part of the year, the first quarter of 2025 is likely to signal the end of this cycle.

With Apple's (AAPL, Financials) future iPhone 17 using a meta-optics-based 3D sensor solution for Face ID, STM is also expected to gain from more content in this device. The novel method allows downsizing and better integration by removing conventional refractive lens components. This improvement is supposed to help STM by around $3 per unit.

With its meta-optics technology expected to be embraced in more consumer and automotive uses, Jefferies expects Apple's engagement to fuel STM's growth through 2025, 2026, and 2027. Particularly from Starlink, growth in microcontrollers and emergent industries such edge artificial intelligence applications and low Earth orbit satellite terminals is also projected to bolster STM's strategy. Furthermore boosting demand might be a fresh semiconductor upcycle in the industrial and automotive industries.

Jefferies sees a significant comeback for STM in the second half of 2025, confirming its Buy rating, as inventory challenges in important regions are easing and growth in them is underway.