BNP Paribas Downgrades GlobalFoundries to Neutral, $51 Price Target

BNP Paribas Exane analyst Karl Ackerman downgraded GlobalFoundries Inc.

(NASDAQ: GFS) from Outperform to Neutral with a price target of $51 (from $80).

“We remain optimistic on GlobalFoundries’ growth plan and capability to diversity into higher margin optical, satcom, and automotive power applications.

However, we believe these will be more gradual than current projections.

Coupled with structural headwinds limiting Smart Mobile growth, we take a more conservative approach to the company’s growth outlook.

We are downgrading GlobalFoundries from Outperform to Neutral and reducing our TP from $80 to $51.

Roughly 70% of revenue and 90% of design wins are single sourced on specialty processes. The differentiation is speciality processes focussed on legacy nodes above 12nm.

Geopolitics is increasingly favoring local foundry capacity.

With half of essential semiconductor capacity in China and Taiwan, supply chains are regionalizing, and GF’s US, EU, and Asia base lets a customer qualify once and build somewhere else, with US capacity carrying a premium.”

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