The average target price of GFS is 46 and suggests 14% upside potential. Usually, this means a HOLD recommendation among investment firms. This neutral recommendation suggests no significant price movement, up or down, in the next 12 months. The most optimistic analyst has a target price of 55.0. This translates into 36% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 35.0. This is equivalent to 13% downside potential in the worst case. 

GLOBALFOUNDRIES Inc. operates as a semiconductor foundry worldwide. It manufactures integrated circuits, which enable various electronic devices that are pervasive. The company manufactures a range of semiconductor devices, including microprocessors, mobile application processors, baseband processors, network processors, radio frequency modems, microcontrollers, power management units, and microelectromechanical systems, as well as offers mainstream wafer fabrication services and technologies. The company was founded in 2009 and is based in Malta, New York.

GLOBALFOUNDRIES Inc.

Technology

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

GFS reported revenue of USD 6 786mn in the last 12 months, up 1% from FY24. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 29% from FY24 to USD -0.34. Market expects EPS to reach USD 1.55 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 1ppts over past six months and grown 4ppts faster in the past month. At the same time, the stock's performance relative to its the peers from the same country and sector is different. The stock outperformed these peers by 5ppts over the past six months and grew 6ppts faster in the past month. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 19.8% in the last 12 months, a decline from 35.0% in FY23. 

Historically, GFS has reported average net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -2.8%, down from 13.8% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -1.1% in the last 12 months, a decrease from 5.7% in FY23. The market analysts predict that RoA will be 4.0% in FY24, again weaker than its peers. 

GLOBALFOUNDRIES Inc. reported a return on equity (RoE) of -1.7% in the last 12 months, down from 9.7% in FY23. The market consensus projects an RoE of 6.5% in FY24, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to -1.3%, below the peers. The consensus estimate for FY24 for RoCE is 5.4%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.4 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

GFS boasts very high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very stable and remains mildly favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to slow historical revenue growth, negligible return on capital, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, GFS is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, GFS is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to notable. We would also like to highlight the notable intraday volatility of the instrument. 

Considering past and projected metrics, the stock is neither 'expensive' nor 'cheap' compared to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, trading at neutral levels on P/FCF. 

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GLOBALFOUNDRIES Inc.

$ 40.35

5

GLOBALFOUNDRIES Inc.

$ 40.35

5

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$ 40.35

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