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UBS Initiates Neutral Coverage on GlobalFoundries Amid Balanced Prospects and Risks
Nov 20, 2024 2:06 PM - Davit Kirakosyan
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UBS analysts initiated coverage on GlobalFoundries (NASDAQ:GFS) with a Neutral rating and a $47 price target, highlighting a mix of opportunities and challenges for the semiconductor foundry.
GlobalFoundries’ strong positioning stems from its diverse technology portfolio and manufacturing capacity concentrated in the US, Europe, and Singapore, which could provide an advantage in the face of ongoing geopolitical tensions. However, the analysts expressed concerns about mature node markets, which are expected to face oversupply pressures through 2026. Additionally, the potential for Intel to pivot its substantial non-EUV capacity to compete in these markets presents a long-term risk.
While GlobalFoundries benefits from a strategically favorable location and industry trends, UBS projected lower-than-consensus growth for the company in 2025 and 2026. The analysts also noted that the stock appears relatively expensive compared to peers, given its lower growth and gross margin profile.
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