STMicroelectronics Shares Drop Sharply After a 131% Rally Over Three Months

The stock drops nearly 4%

STMicroelectronics shares are down 3.81% at €64.18 in mid-morning trading, trailing the CAC 40 while the Paris index edges up by 0.18%. This decline follows the drop from the previous day and affects several equipment manufacturers and chipmakers: ASML is down 3.19%, ASM International loses 4.05%, Micron dropped 7.74% at the previous close, and AMD is down 3.56%. Only Nvidia is holding up (+1.82%). Despite this slowdown, the stock still maintains a gain of 36.5% over one month and 131% over three months, after a series of historical highs recorded from mid-May to early June. This movement comes the day after the launch of a new intelligent vibration sensor with embedded AI, introduced on June 3 for industrial predictive maintenance.

UBS raises its price target from €49 to €80, but an RSI at 76 indicates extreme tension

The selling pressure follows a dramatic upgrade by UBS, which raised its price target from €49 to €80 on June 4 while reaffirming its buy rating. Kepler Cheuvreux maintained its target at €48 on June 3 and its positive outlook. The discrepancy between these two benchmarks illustrates the divergence in analysts' readings after the rally. Technically, an RSI at 76 remains in a pronounced overbought zone, and the price is more than 12% above the 20-day moving average (€56.88) and 43% above the 50-day moving average (€44.76), an unusual gap that makes the stock vulnerable to pullbacks. The resistance identified at €68.49 has capped the last upward leg. According to the consensus of analysts surveyed, the stock is trading at about 61 times the expected earnings for the current fiscal year and 33 times those for the next fiscal year.