US stock futures muted as rate cut bets wane ahead of Jackson Hole
On Tuesday, Citi adjusted its outlook on GlobalFoundries Inc. (NASDAQ: NASDAQ:GFS), reducing the semiconductor company's price target from $45.00 to $40.00, while keeping a Neutral stance on the stock. The revision followed GlobalFoundries' financial report earlier in the day, which presented a strong performance for the third quarter of 2023 and an uplifted guidance for the fourth quarter of 2024, primarily propelled by robust sales in the automotive sector, which accounted for 15% of the company's third-quarter 2024 revenue.
Despite the positive momentum, GlobalFoundries forecasted a decline in revenue for the first quarter of 2025, anticipating a high single-digit percentage drop sequentially. This projection falls short of both Citi's and the consensus estimates among analysts. In light of this guidance, Citi has adjusted its financial estimates for GlobalFoundries downward.
The company's third-quarter report and the subsequent guidance update have prompted Citi to reassess its expectations for GlobalFoundries' financial trajectory. The lowered price target reflects concerns over the anticipated revenue dip in the upcoming first quarter, which the company has attributed to market conditions.
GlobalFoundries is a key player in the semiconductor industry, providing a range of chip manufacturing services. The company's performance and outlook are closely watched by investors and industry analysts, as they can be indicative of broader trends within the technology and automotive sectors, where semiconductors play a critical role.
In other recent news, GlobalFoundries, the third-largest contract chipmaker in the world, has reported a positive revenue forecast for the fourth quarter. The company's optimistic outlook is attributed to a resurgence in semiconductor demand from smartphone manufacturers. This resurgence has been buoyed by a 4% annual increase in global smartphone shipments, which reached 316.1 million units in the third quarter, according to research from IDC.
GlobalFoundries projects its fourth-quarter revenue to range between $1.80 billion and $1.85 billion, slightly above the $1.80 billion analysts had estimated. This follows the company's third quarter revenue of $1.74 billion, which exceeded the predicted $1.73 billion. The company's smart mobile devices end-market revenue saw an increase of 11% to $868 million in the same quarter.
The company also anticipates its adjusted earnings per share for the fourth quarter to be between 39 cents and 51 cents, higher than the forecasted 37 cents. This is a continuation of the positive trend from the third quarter, where the adjusted profit per share was 41 cents, surpassing the expected 33 cents per share.
InvestingPro Insights
GlobalFoundries' recent performance and future outlook can be further contextualized with data from InvestingPro. The company's market capitalization stands at $19.87 billion, reflecting its significant presence in the semiconductor industry. Despite the recent challenges, GlobalFoundries maintains a profitable status with a P/E ratio of 31.56, indicating that investors are still willing to pay a premium for its earnings.
InvestingPro Tips highlight that GlobalFoundries has experienced a substantial stock price decline over the past week and six months, aligning with Citi's reduced price target. This volatility is characteristic of the semiconductor industry, which is known for its cyclical nature. The company's ability to maintain profitability over the last twelve months, despite these challenges, demonstrates its resilience.
Another relevant InvestingPro Tip notes that analysts anticipate a sales decline in the current year, which corresponds with GlobalFoundries' own guidance for the upcoming quarter. This expectation of reduced revenue is likely influencing investor sentiment and analyst projections.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips that could provide valuable insights into GlobalFoundries' financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.