Joseph Moore, an analyst from Morgan Stanley, maintained the Hold rating on GlobalFoundries Inc (GFS – Research Report). The associated price target was lowered to $38.00.
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Joseph Moore has given his Hold rating due to a combination of factors that reflect both stability and caution in GlobalFoundries Inc’s current market position. The company’s recent performance has aligned with expectations, with no significant changes in its outlook since the previous quarter. While there is a prudent level of caution regarding consumer-oriented segments like IoT and mobile, the automotive sector is expected to see robust growth, which contributes positively to the company’s overall prospects.
However, concerns about wafer pricing and competitive pressures remain. Although the environment is described as constructive, there are expectations of mid-single-digit declines in wafer prices, partly due to product mix and potential competitive challenges. Additionally, while a significant portion of GlobalFoundries’ business is insulated from oversupply issues, there is still a portion that could face price competition. Despite these challenges, improvements in gross margin levers such as utilization and mix, particularly in the automotive sector, are anticipated. Overall, these factors contribute to the Hold rating, balancing the company’s strengths with the risks it faces.
In another report released yesterday, Bank of America Securities also reiterated a Hold rating on the stock with a $40.00 price target.