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Investing.com - Jefferies downgraded GlobalFoundries Inc. (NASDAQ:GFS) from Buy to Hold and set a price target of $38.00, citing concerns about the company’s ability to meet future revenue and margin targets. The semiconductor manufacturer, currently trading at $35.32 with a market capitalization of $19.6 billion, has seen its stock decline nearly 20% year-to-date according to InvestingPro data.
The downgrade comes despite GlobalFoundries continuing to benefit from the ongoing re-shoring of semiconductor manufacturing to the United States, which was highlighted by notable design wins in the second quarter.
Jefferies expressed skepticism about GlobalFoundries’ ability to achieve its revenue and gross margin targets for calendar years 2025 and 2026, creating a "high bar" for the company to clear.
The research firm noted that near-term catalysts for the stock appear limited due to the absence of a cyclical recovery, pricing headwinds, and increased competitive pressures in the semiconductor manufacturing space.
Jefferies’ $38 price target for GlobalFoundries is based on a multiple of 16 times the company’s projected calendar year 2027 price-to-earnings ratio.
In other recent news, GlobalFoundries has completed its acquisition of MIPS, a provider of AI and processor intellectual property. This acquisition is aimed at enhancing GlobalFoundries’ capabilities in artificial intelligence and edge computing. In another development, GlobalFoundries announced an expanded partnership with Apple to advance wireless connectivity and power management technologies. This collaboration is expected to boost investments at GlobalFoundries’ manufacturing facility in Malta, New York. Additionally, GlobalFoundries is collaborating with Egis Technology to develop new time-of-flight sensor technology on its 55nm platform. This technology will be used in applications such as mobile devices and smart appliances. Furthermore, GlobalFoundries and Synopsys have launched a chip design program for university students to gain practical semiconductor design skills. Lastly, MIPS, a GlobalFoundries company, has appointed Michael Zirngibl as Vice President of Business Development for the EMEA region, focusing on automotive and industrial markets. These are the latest developments surrounding GlobalFoundries.
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