GlobalFoundries stock price target lowered to $40 by Baird on weaker demand

Investing.com - Baird has lowered its price target on GlobalFoundries Inc. (NASDAQ:GFS) to $40.00 from $50.00 while maintaining an Outperform rating on the semiconductor foundry company. According to InvestingPro analysis, the company appears undervalued at its current market price of $32.80.

The price target reduction comes as GlobalFoundries faces a year-over-year revenue decline in the third quarter, partly due to lower pricing in the mobile segment during the second half of 2025. The company, with a market capitalization of $18.2 billion, reported revenue of $6.79 billion in the last twelve months.

Baird analyst commentary indicates uncertainty about whether the first quarter of 2025 represented a cycle bottom, or if earnings per share will only return to first-quarter 2025 levels by the first quarter of 2026. InvestingPro data shows strong financial health indicators, including a healthy current ratio of 2.51 and more cash than debt on its balance sheet.

GlobalFoundries expects a weaker demand environment in the second half of the year, particularly in the consumer segment where customers made advance purchases in the second quarter ahead of tariff increases, resulting in higher inventory levels. The company also anticipates sequential weakness in the automotive segment during the third quarter.

Despite these challenges, Baird views GlobalFoundries’ acquisition of MIPS positively, noting it provides "an interesting angle for edge AI applications and processor IP, and notably for the Asia market."

In other recent news, GlobalFoundries Inc. reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share of $0.42, compared to the forecast of $0.36. Revenue for the quarter reached $1.69 billion, slightly above the anticipated $1.68 billion. Despite these positive earnings and revenue results, the company’s stock experienced a decline, influenced by broader market concerns and specific challenges within the semiconductor sector. Additionally, Raymond (NSE:RYMD) James adjusted its price target for GlobalFoundries, lowering it to $50 from $55, while maintaining an Outperform rating. The adjustment followed the June quarter results, which were described as "roughly in line" with expectations, despite some volatility in top-line performance. These developments highlight the ongoing challenges and opportunities faced by GlobalFoundries in the current market environment.

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