Bank of America Securities analyst Vivek Arya maintained a Hold rating on GlobalFoundries Inc (GFS – Research Report) yesterday and set a price target of $45.00.
Vivek Arya’s rating is based on a combination of factors that reflect both opportunities and challenges for GlobalFoundries Inc. The potential merger with United Microelectronics Corp (UMC) presents a mixed outlook. On one hand, it could help address the industry’s current oversupply issues, particularly in mature nodes used in PCs, smartphones, and consumer electronics, while also providing scale to compete against growing Chinese competition.
However, the complexities of a cross-border merger, especially amid geopolitical tensions, pose significant challenges. The merger could complicate GlobalFoundries’ current advantage of having no China/Taiwan manufacturing exposure, potentially introducing geopolitical instability. Additionally, neither GlobalFoundries nor UMC possess leading-edge manufacturing capabilities, limiting their ability to compete with industry leaders like TSMC. These factors, along with the current industry oversupply and slow market demand recovery, contribute to the Hold rating, despite the company’s strengths in organic growth prospects in sectors like automotive and data centers.
GFS’s price has also changed slightly for the past six months – from $40.250 to $36.910, which is a -8.30% drop .