Cantor maintains GlobalFoundries stock Neutral with $45 target

On Monday, Cantor Fitzgerald maintained a Neutral stance on GlobalFoundries Inc. (NASDAQ:GFS), with a set price target of $45.00, falling within the analyst range of $40-65. According to InvestingPro data, the company currently trades slightly below its Fair Value, with a market capitalization of $21.25 billion. The firm's analysis highlighted that penalty payments for under-utilization remain a point of attention. GlobalFoundries has taken steps to remove structural costs to enhance normalized gross margins, currently at 25.5%. The market's attention may shift towards possible price concessions that could emerge from long-term agreement (LTA) renegotiations.

The semiconductor manufacturer, which specializes in various integrated circuits, has been working on optimizing its financials amid a competitive industry landscape. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 2.42 and operates with moderate debt levels. Despite the efforts to streamline operations, the possibility of renegotiating terms with customers poses a potential impact on the company's pricing strategy and, ultimately, its revenue, which analysts expect to decline this year.

Cantor Fitzgerald's commentary further noted that while GlobalFoundries is expected to outperform its peers in the mature-node segment by calendar year 2025, the firm prefers to invest in companies with a stronger connection to the advanced artificial intelligence cycle. This view aligns with broader analyst sentiment, as reflected in InvestingPro 's data showing 14 analysts have revised their earnings expectations upward for the upcoming period. This preference is based on the strategic alignment with the initiatives of the current U.S. administration, which emphasizes domestic manufacturing under the "Build in America" policy.

The focus on domestic production aligns with the Trump Administration's efforts to bolster the U.S. semiconductor industry, a critical sector for national security and economic competitiveness. GlobalFoundries, with its manufacturing presence in the United States, is well-positioned to benefit from these initiatives.

Investors are advised to watch for further developments from GlobalFoundries, particularly in relation to its cost optimization measures and the outcomes of LTA renegotiations, which could influence the company's financial performance and stock valuation in the market.

In other recent news, GlobalFoundries, a semiconductor manufacturer, has secured significant funding for expansion and production enhancement. The company received an additional $9.5 million from the U.S. Department of Defense's Trusted Access Program Office to expand its gallium nitride (GaN) on silicon semiconductor manufacturing capabilities. This funding is expected to facilitate large-scale production of GaN chips, known for their high performance and energy efficiency.

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Simultaneously, GlobalFoundries has been granted up to $1.5 billion through the CHIPS and Science Act by the U.S. Department of Commerce for the expansion of its New York facilities and the modernization of its Vermont plant. These projects are part of a larger $13 billion investment aimed at bolstering U.S. chip manufacturing capabilities.

However, UBS recently initiated coverage of GlobalFoundries with a Neutral rating, expressing concerns about potential oversupply in the markets for mature node technologies and a cautious outlook on the company's financial performance relative to its peers. Despite recognizing GlobalFoundries' diverse technology offerings and strategic locations, UBS anticipates lower growth and gross margins for the company compared to other sector players. These are among the recent developments involving GlobalFoundries.

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