Shares of STMicroelectronics (NYSE:STM) rose 17.3% in October 2019, according to data from S&P Global Market Intelligence. Most of the Swiss semiconductor maker's gains last month hinged on a modestly promising third-quarter earnings report, which showed signs of a return to stable revenue growth after a few lean quarters.
STMicro posted top-line growth of 1.2% in the third quarter, placing its revenues at $2.55 billion. Unadjusted earnings fell 17% year over year to $0.34 per share. Your average Wall Street analyst would have settled for earnings near $0.29 per share on sales of approximately $2.5 billion, and STMicro exceeded both of these targets by a comfortable margin.
STMicro's management noted that many of its target markets remain soft amid geopolitical uncertainty, but a handful of key sectors still pushed the company back to a small sliver of year-over-year revenue growth. In particular, the company saw a strong demand for analog processors and sensors intended for use in wearables and other interfaces between computers and the physical world.
CEO Jean-Marc Chery sees market conditions generally improving in the fourth quarter and then really picking up speed in 2020. A return to normal international trade relations would only accelerate that recovery.
STMicro's shares took a nosedive in 2018, closing that year 36% lower due to the onset of those international trade tensions. The stock is recovering nicely in 2019, rising by 70% year to date and 53% over the last 52 weeks. Looking forward to healthier market conditions and rising order volumes from key market sectors such as autonomous vehicles, wearable computing, and 5G-connected Internet of Things devices, those gains might be just the tip of the iceberg -- the real gains should be triggered in 2020 and beyond.